European debt mutualisation. Finding a legitimate balance between solidarity and responsibility mechanisms
Jacques Delors Institute Policy Paper
Paris : Notre Europe - Institut Jacques Delors
Jacques Delors Institute Policy Paper : 255
1st lines: In the upcoming European Council on July 17 and 18, EU member states will fight for a compromise on the European Commission’s main project to tackle the economic fallout of the Covid-19 crisis across Europe: a new 7-year EU budget propped up with a temporary Recovery Instrument (Next Generation EU) amounting to EUR 750 bn of jointly issued debt and to be passed on to EU countries as grants and loans. It is one of the most ambitious in a long line of proposals for European debt mutualisation. While joint borrowing can carry a lot of advantages, debt mutualisation has always been very controversial. Confrontations between those countries supposedly benefiting and losing from mutualising debt have repeatedly centered on the legitimate balance of solidarity and responsibility that such debt implies. Democratic legitimacy in solidarity-responsibility arrangements can be achieved when they can deliver in terms of output legitimacy (being effective in economic terms), input legitimacy (ensuring sufficient room for domestic politics in deciding national policy trajectories) and throughput legitimacy (being run in a transparent and accountable manner).