Over the coming years, the European Union faces a critical need to invest significantly in European Public Goods (EPGs), particularly regarding the double transition and the imperatives of defence and security.
This EMU Lab event proposes the establishment of a dedicated fund to address this pressing demand. However, for this proposal to gain political traction and foster necessary trust, a delicate balance must be struck.
It is imperative that any central-level allocation of resources goes hand in hand with compliance by national budgetary policies with the newly reformed common fiscal rules. Setting an adequate level of conditionality for accessing this fund presents a nuanced challenge. On one hand, it must incentivise sound fiscal policies by member states, while on the other, ensuring the effective delivery of EPGs that benefit all EU members.
The optimal degree of conditionality should offer reassurance to fiscally conservative countries that EU funding will not be squandered through opportunistic behaviour, while also rewarding more fragile countries undertaking fiscal retrenchment efforts. If successfully implemented, such a model of conditionality could be potentially extended from genuine EPGs financed and delivered at the EU level to other community programmes.
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The Economic and Monetary Union Laboratory (EMU Lab) is a collaborative initiative driven by the Tommaso Padoa-Schioppa Chair and the Pierre Werner Chair, aiming to reassess the Economic and Monetary Union's structure in light of current European and global economic conditions. We seek to identify research and policy innovations to promote stability, growth, and fairness in the EMU, enhancing the resilience of the European economy and society.