Written Question: Debt union and the moral hazard stemming from ‘Next Generation EU’

(Source: European Parliament)

Date submitted: 12 March 2021

Question for written answer E-001408/2021
to the Commission
Rule 138
Charlie Weimers (ECR)

Subject: Debt union and the moral hazard stemming from ‘Next Generation EU’

The German Federal Audit Office (Bundesrechnungshof) has criticised the Next Generation EU (NGEU) fund. They warn it could weaken the EU as a community based on rules, and ‘endanger the stability of the economic and monetary union(1)’.

The Bundesrechnungshof raises several critical points, including that joint borrowing could become permanent, and that ‘EU Member States are jointly liable for debts in the three digit billion range’. It also warns of the risks to budgets of financially stronger countries that incur follow up-costs at the time when their national recovery programmes are due for repayment(2).

The Bundesrechnungshof also warns that:

a) NGEU sets up debt-financed transfers by disbursing funds as grants that are not repaid by the recipients, but through the EU budget.

b) Member States are jointly liable for NGEU debts through their future contributions to the EU budget.

c) NGEU enables Member States to circumvent fiscal rules by borrowing at EU level and allocating the money to themselves as grants.

The Bundesrechnungshof warns that NGEU could be seen as a precedent for shifting costs of future crises to EU level. How does the Commission intend to mitigate these risks of moral hazard?

What is the Commission’s view on the ‘more serious long-term risks’ outlined by the Bundesrechnungshof, specifically NGEU undermining the EU as a community based on law?

(1) Bericht nach § 99 BHO zu den möglichen Auswirkungen der gemeinschaftlichen Kreditaufnahme der Mitgliedstaaten der Europäischen Union auf den Bundeshaushalt (Wiederaufbaufonds)
(2) https://www.bundesrechnungshof.de/de/veroeffentlichungen/produkte/sonderberichte/2021/eu-wiederaufbaufonds-darf-keine-dauereinrichtung-werden

%d bloggers like this: