My previous post discussed the rationale for the Commission’s revised MFF proposal put forward on 27 May 2020 which includes a proposal for a European Recovery Instrument (ERI) to finance front-loaded expenditure in the next MFF plus a slightly revised ‘standard’ MFF (which the Commission refers to as a ‘reinforced’ MFF). In broad terms, the reinforced MFF allows for commitment appropriations amounting to €1,100 billion over the 2021-2027 period, while the ERI would help to finance a further €750 billion of spending in the 2021-2024 period, in constant 2018 prices. Together, they add up to a total proposed spending of €1,850 billion over the MFF period.
The stakes for the European Union have never been higher. In a year when the latest Commission economic forecasts project a 8% decline in GDP as a result of the measures taken to contain the spread of the coronavirus, the question is whether the European Union can provide a response that is macroeconomically significant and builds on the principles of solidarity inherent in the concept of a common citizenship. If it fails to deliver, we can say good-bye to the European Union and prepare to take our chances in an unforgiving geo-political world where the only other leaders are an increasingly authoritarian and self-centred China and an increasingly unpredictable and self-centred America.