The compromise agreed provisionally by the Eurogroup meeting of finance ministers on April 9th was a relief. For the Eurogroup to have broken up a second time in a week without a deal would have been a disaster. It would probably not have resulted in a bond-market panic—massive interventions by the European Central Bank have neutralised that possibility for now. But in political terms it would have sent a terrible signal of disunity.
The three-pronged package—with funding for health expenditure via the European Stability Mechanism, loans for businesses from the European Investment Bank and €100 billion for the European Commission’s unemployment fund—is modest in scope. It is disappointing to those of us who support the ‘corona bonds’ position. But it is a relief at least that it was a compromise, rather than a humiliating capitulation inflicted on the coalition of the nine advocates of corona bonds by the stubborn and short-sighted egotism of the Dutch and Germans. [...]
Of course, one should never say never. Sophisticated polling reveals an openness on the part of the German public towards corona bonds, which could be exploited by creative and brave political leadership. Expert opinion has shifted quite markedly; the broad-based calls for joint action from German economists are new and extremely welcome. Both in Germany and the Netherlands a large part of the public is frankly embarrassed by their government’s positions.
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