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How to spend it. A proposal for a European Covid-19 recovery programme

Author

Listed:
  • Jérôme Creel

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Mario Holzner
  • Francesco Saraceno

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Andrew Watt
  • Jérôme Wittwer

    (BPH - Bordeaux population health - UB - Université de Bordeaux - Institut de Santé Publique, d'Épidémiologie et de Développement (ISPED) - INSERM - Institut National de la Santé et de la Recherche Médicale)

Abstract
The Recovery Fund recently proposed by the EU Commission marks a sea-change in European integration. Yet it will not be enough to meet the challenges Europe faces. There has been much public debate about financing, but little about the sort of concrete projects that the EU should be putting public money into. Here we propose a 10-year, €2tn investment programme focusing on public health, transport infrastructure and energy/decarbonisation. It consists of two pillars. In a national pillar Member States — broadly as in theCommission proposal — would be allocated €500bn. Resources should be focused on the hardest-hit countries and front-loaded: we suggest over a three-year horizon. The bulk of the money —€1.5tn — would be devoted to finance genuinely European projects, where there is an EU value added. We describe a series of flagship initiatives that the EU could launch in the fields of public health, transport infrastructure and energy/decarbonisation. We call for a strengthened EU public health agency that invests in health-staff skillsand then facilitates their flexible deployment in emergencies, and is tasked withensuring supplies of vital medicines (Health4EU). We present costed proposals for two ambitious transport initiatives: a dedicated European high-speed rail network, the Ultra-Rapid-Train, with four-routes cuttingtravel times between EU capitals and regions, and, alternatively, an integrated European Silk Road initiative that combines transport modes on the Chinese model. In the area of energy/decarbonisation we seek to "electrify" the Green Deal. We call for funding to accelerate the realisation of a smart and integrated electricity gridfor 100%-renewable energy transmission (e-highway), support for complementary battery and green-hydrogen projects, and a programme, modelled on the SURE initiative, to co-finance member-state decarbonisation and Just Transition policies. The crisis induced by the pandemic, coming as it does on top of the financial and euro crises, poses a huge challenge. The response needs to take account of the longer-run structural challenges, and above all that of climate change. The European Union should rise to these challenges in the reform of an ambitious medium-runrecovery programme, appropriately financed. An outline of such a programme isset out here by way of illustration, but many permutations and options are available to policymakers.

Suggested Citation

  • Jérôme Creel & Mario Holzner & Francesco Saraceno & Andrew Watt & Jérôme Wittwer, 2020. "How to spend it. A proposal for a European Covid-19 recovery programme," SciencePo Working papers Main hal-03384646, HAL.
    • Handle: RePEc:hal:spmain:hal-03384646
    Note: View the original document on HAL open archive server: https://hal.science/hal-03384646
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    References listed on IDEAS

    as
    1. Bardt, Hubertus & Dullien, Sebastian & Hüther, Michael & Rietzler, Katja, 2019. "Für eine solide Finanzpolitik: Investitionen ermöglichen!," IW policy papers 10/2019, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    2. Lieve Fransen & Gino del Bufalo & Edoardo Reviglio, 2018. "Boosting Investment in Social Infrastructure in Europe," European Economy - Discussion Papers 074, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Jérôme Creel & Mario Holzner & Francesco Saraceno & Andrew Watt & Jérôme Wittwer, 2020. "How to Spend it: A Proposal for a European Covid-19 Recovery Programme," wiiw Policy Notes 38, The Vienna Institute for International Economic Studies, wiiw.
    4. Joan Costa-i-Font, 2020. "The EU needs an independent public health authority to fight pandemics such as the COVID-19 crises," Vox eBook Chapters, in: AgneÌ€s BeÌ nassy-QueÌ reÌ & Beatrice Weder di Mauro (ed.), Europe in the Time of Covid-19, edition 1, volume 1, chapter 1, pages 29-34, Centre for Economic Policy Research.
    5. Philipp Heimberger & Mario Holzner & Artem Kochnev, 2018. "A ‘European Silk Road’," wiiw Research Reports 430, The Vienna Institute for International Economic Studies, wiiw.
    6. Mario Holzner, 2019. "One Trillion Euros for Europe. How to finance a European Silk Road with the help of a European Silk Road Trust, backed by a European Sovereign Wealth Fund and other financing instruments," wiiw Policy Notes 35, The Vienna Institute for International Economic Studies, wiiw.
    7. repec:hal:spmain:info:hdl:2441/2gtm5um5lm9vvo08gf2gn4a066 is not listed on IDEAS
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    Cited by:

    1. repec:spo:wpmain:info:hdl:2441/2gtm5um5lm9vvo08gf2gn4a066 is not listed on IDEAS
    2. Francesco Saraceno, 2021. "The Return of Fiscal Policy: Eurozone Macroeconomic Governance after Covid," Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, Fondazione Luigi Einaudi, Torino (Italy), vol. 55(2), pages 191-208, December.
    3. Oliver Picek, 2020. "Spillover Effects From Next Generation EU," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(5), pages 325-331, September.
    4. Bartzokas, Anthony & Giacon, Renato & Macchiarelli, Corrado, 2022. "Exogenous shocks and proactive resilience in the EU," MERIT Working Papers 2022-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Julia Grübler, 2021. "Reshaping Trade Ties with China in the Aftermath of COVID-19," wiiw Policy Notes 44, The Vienna Institute for International Economic Studies, wiiw.
    6. Iana Paliova, 2021. "Bulgaria’s Fiscal Sustainability and Policy Response to the COVID-19 Outbreak," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 9(1), pages 31-38, June.
    7. Sarah Wolf & Jonas Teitge & Jahel Mielke & Franziska Schütze & Carlo Jaeger, 2021. "The European Green Deal — More Than Climate Neutrality," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(2), pages 99-107, March.
    8. Vasily Astrov & Mario Holzner, 2021. "The Visegrád Countries: Coronavirus Pandemic, EU Transfers, and their Impact on Austria," wiiw Policy Notes 43, The Vienna Institute for International Economic Studies, wiiw.
    9. Jérôme Creel & Mario Holzner & Francesco Saraceno & Andrew Watt & Jérôme Wittwer, 2020. "How to Spend it: A Proposal for a European Covid-19 Recovery Programme," wiiw Policy Notes 38, The Vienna Institute for International Economic Studies, wiiw.
    10. Francesco Saraceno, 2021. "Europe After COVID-19: A New Role for German Leadership?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(2), pages 65-69, March.
    11. Philipp Heimberger & Andreas Lichtenberger, 2023. "RRF 2.0: A Permanent EU Investment Fund in the Context of the Energy Crisis, Climate Change and EU Fiscal Rules," wiiw Policy Notes 63, The Vienna Institute for International Economic Studies, wiiw.
    12. repec:hal:spmain:info:hdl:2441/2gtm5um5lm9vvo08gf2gn4a066 is not listed on IDEAS
    13. Sumarno, Theresia B. & Sihotang, Parulian & Prawiraatmadja, Widhyawan, 2022. "Exploring Indonesia's energy policy failures through the JUST framework," Energy Policy, Elsevier, vol. 164(C).

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    More about this item

    Keywords

    European recovery programme; Covid-19;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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