5 lezioni per il futuro dell’Europa
European Parliamentary Week 2022 — High-Level Conference on the Recovery and Resilience Facility: Lessons for the future
Panel speech by Tommaso Nannicini
Thank you, Madam chair, honorable members, it is a pleasure to join this discussion in a key juncture of European history.
I’m sure that, over the years, each one of us has cited Jean Monnet many times: “Europe — he wrote — will be forged in crises and will be the sum of the solutions adopted for those crises.” But probably, as members of the European Union, we never felt his words so true, so defining, as we do today.
What lessons for the future can we learn from the Recovery and Resilience Facility?
I think we should learn at least five lessons.
The first one is a political lesson. In 2008, we learned the lesson of the financial crisis the hard way, as we lately realized that an ill-conceived austerity hampered our response to the crisis.
In front of the pandemic crisis and of the Russian aggression to the free people of Ukraine, we took stock of past mistakes. “Our unity is the best strength,” as President von der Leyen told us in her remark. This time, we have put aside the lack of trust among member States, which so many times slowed down the economic integration process in the past, and we have taken the right responses to the crisis, with the right speed and the right dimension. But these steps forward are still fragile, as they cannot walk on the common tools and institutions of a true fiscal union.
The second lesson is a macroeconomic lesson. Monetary policy has been constrained in its ability to achieve stabilization by the effective lower bound on interest rates. This creates an even larger need for coordination between monetary and fiscal policy. Also the independence of the ECB would benefit from a greater role and coordination of fiscal policy at the Euro area level. And ECB independence, as well as its operations, could also benefit from a debt assumption plan (as proposed by Giavazzi, Guerrieri, Lorenzoni, Weymuller), that is, a plan to transfer a portion of the national debts accumulated during the pandemic from the balance sheet of the ECB to a European debt management agency.
The third lesson is a market lesson. There’s high demand for safe assets. On the market side, the experience with NGEU debt issuance confirms the existence of a strong demand for safe European debt tools. Something we should exploit.
The fourth lesson is an inclusive growth lesson. To make our economies stronger and the European social model sustainable, we need common resources. The Recovery and Resilience Facility shows us the potential of defining common targets to make well-financed interventions (for example, on the green and digital transition). After the relaxation of the escape clause of the Stability and Growth Pact, we’ll need simpler, more credible, and transparent fiscal rules. And we’ll need some sort of golden rule, to foster investment in European common goods, including social cohesion.
The fifth and last lesson is an institutional lesson. The Recovery and Resilience Facility shows us the possibility of achieving fruitful cooperation and oversight in the relation between national governments and European institutions. The close link between the resources of the Recovery and Resilience Facility and the reforms defined in the European Semester shows us how common fiscal measures can be designed so as to reduce moral hazard.
But, again, these steps forward are fragile. All the effort we are making will be lost at some point, if we don’t build a stable fiscal framework with effective discipline tools, EU-level automatic stabilizers, and a common safe asset financed with common resources. And such a framework won’t be possible if we don’t democratize fiscal policy decisions. Decisions on taxes, debt, and expenditure must be based on a true political discussion at the European level. We need to bring representative democracy into our fiscal decision making. We need, in a word, to move toward a fiscal union.
I know we don’t all agree on this immediate goal. However, even when we postpone divisive decisions, we should never remove them from our discussion. There is no favorable wind for the sailor who doesn’t know where to go. We can go to a fiscal union slowly, step by step, but let’s not forget this goal, which is political and economic at the same time.
Money are important, but so are values and institutions. Luckily enough, during the terrible crises we are facing, we rediscovered our shared values and our common interests. Let’s build common institutions that can protect and serve those values and those interests in difficult times.
