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The European Union’s recovery plan has been adopted in response to the coronavirus crisis. It is a game changer in terms of European economic policy integration: NextGenerationEU is larger than any other stimulus package passed by the EU in previous crises. Together with the EU’s long-term budget a total of EUR 1.8 trillion will be spent to boost and modernize Europe’s economy with major priorities set in the areas of digitalization and climate change. The recovery package will also be financed by commonly issued debt. Finding the right balance between expansionary fiscal policy and budgetary discipline will be a key challenge in the upcoming years.

In order to mitigate the impact of the coronavirus pandemic, most G20 member countries have committed to fiscal stimulus packages. While deficits in the European Union are about 7 percent of its gross domestic product (GDP) and a large share of it reflects automatic stabilizers, the United States passed two fiscal stimulus packages and authorized additional aid that amounts to approximately 5 trillion Dollars. Fiscal deficits are estimated to be around 18 percentage points of GDP in 2020 and 2021. Even though the EU-wide fiscal stimulus plan that included borrowing 750 billion Euros (892 billion dollars) from public markets is unprecedented, the money might not be available to member states before the second half of 2021. Critics argue that this is too little too late and that measures are not targeted enough to boost consumption. On the other hand, there are voices reminding that ‘the bigger they are the harder they fall’: the enormous US relief package could lead to a spike in inflation and threaten long-term financial stability.

What are the options and scenarios for dealing with public debt in the post-Covid euro area? This question will be at the heart of our digital seminar, jointly organized by ZEW Mannheim and EconPol Europe. Our debate will address debt sustainability, risks to ECB independence, the potential of debt restructuring operations and debt cancellation, and the capacity of growth strategies to alleviate sustainability problems.

The event will take place as a Webex webinar and is open to the public. It comprises short presentations by the speakers and concludes with a general Q&A session. Friedrich Heinemann from ZEW will moderate the event.

The webinar is a joint event of ZEW Mannheim and EconPol Europe in collaboration with the Brigitte Strube Stiftung.

The European Fiscal Board (EFB) recently released its fourth annual report, assessing the implementation of the EU fiscal framework in 2019. The report provides new evidence that the EU fiscal framework falls short of its aims and should be reformed without delay. The reforms become even more urgent against the backdrop of the ongoing pandemic. The Covid-19 crisis has exposed long-standing gaps in EMU’s architecture. How the EU’s fiscal architecture might look after the Covid-19 shock will be at the heart of our digital seminar jointly organized by ZEW Mannheim and EconPol Europe. 
 
 

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The corona pandemic has created a health and economic crisis without modern parallel: as it hit countries ill-prepared and spread quickly within the EU, member states had to adopt more interventionist approaches than ever before – particularly in the areas of fiscal and monetary policy, but also labor markets, redistribution mechanisms, and industrial policy. Finding a compromise as to which measures are suitable to save the Union is the subject of emotional debate. Yet, the decisions and measures taken in each country and at a European level will set the course for economic and political development in the years to come. They will also shape the countries' prospects for the coming decades.

Against this backdrop, the EconPol Europe Annual Conference 2020 will once again bring together our expert network members from across Europe with politicians, policy makers, researchers and journalists to discuss the question, 'How to Safeguard Sustainable Financing for the EU?'. This year’s conference will be held online, with broadcasts from across Europe and exclusive online content. Our day one panel discussion will focus on the topic ‘Balancing New Challenges and Sustainable and Inclusive Growth for Europe’.