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Online debate: The French-German COVID-19 Recovery Plan

On 18 June, the Florence School of Banking and Finance hosted Jörg Kukies, State Secretary at the German Ministry of Finance and Odile Renaud-Basso, Director General of the French Treasury, in an online seminar that discussed ‘The French-German COVID-19 Recovery Plan’.

This highly topical debate introduced and discussed the unprecedented French-German proposal of a grants-based Recovery Plan funded by a European Union borrowing capacity entrusted to the European Commission. In their introductory remarks, the speakers outlined the rationale of such a tool, which is intended to be a temporary crisis management tool to respond collectively towards the negative impact of the COVID-19 crisis, that has been a major shock to the European (and worldwide) economy. The speakers reviewed the genesis of the agreement, highlighting in particular the emergency crisis mitigation actions undertaken in France and Germany, highlighting then the shared understanding of a need to go beyond the national level and the consequent call for a more concerted action at European level.

The discussion then touched briefly on the nature of the Recovery Fund proposed in the franco-german proposal (the full text is available here), which in a nutshell will make it possible to issue debt, benefiting from a low interest rate, to finance short-term expenditures to support the European economy. The debate that followed highlighted the unprecedented nature of such an agreement, which changed the dynamic of the discussion at the European Union level, resulting in a change on the European agenda in a wide series of initiatives, that could increase collective cooperation in projects such as the development of the capital markets union, or the introduction of a common fiscal framework.

In the discussion moderated by Elena Carletti (Bocconi University and Florence School of Banking and Finance, European University Institute), besides the importance of the French-German proposal for Europe, the speakers discussed the relationship between the franco-german initiative and the current and future actions at European level, considering also the political hurdles, varying national preferences between EU member states, and the possible development in the worldwide international scenarios.

Press release: text of the agreement