Large grants and a significant debt mutualisation will be hard, but to avert catastrophe they are a price worth paying
ago this month Robert Schuman, the French foreign minister, proposed a European “coal and steel community”. With that humble agreement governing two commodities, six war-ravaged countries created a common market that evolved into the European Union.
The journey towards integration since then has been bumpy, but it has had a sense of direction. National leaders came and went, the Berlin Wall rose and fell, economic hurricanes struck and blew themselves out. Somehow, themuddled through. It deepened, building the world’s largest single market, letting its people move freely across borders and creating a common currency. It broadened, as 22 states joined the original six, including 11 that had suffered for decades under communism.
Another example is the single currency. As countries cushion the effects of lockdowns, their debts are rising sharply. Because governments in the euro zone borrow in a common currency but must finance themselves, these debts could rise to unsustainable levels. The problem is severe in Italy, which was in trouble even before covid-19 struck and had gross public debts of €2.
Some northern European leaders recognise that they have a problem. In the coming months they are likely to agree to a one-off increase in the’s seven-year budget, but the terms are in dispute—the southerners are calling for as much as €1trn-1.5trn and they want grants, not loans. There is also a proposal to issue common debt as a token gesture, but that is disputed, too.is to thrive, it will have to be a lot more ambitious than the northerners admit.
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