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The EU expects common debt issuance for the bloc to begin shortly.
“The last national parliament will soon be giving their green light to the decision allowing the commission to borrow in the financial markets,” said Paolo Gentiloni, EU Commissioner for the Economy, speaking at the IIF’s European Summit.
“We are now clearing the last hurdles of what amounts to a real game changer, the issuance of common European debt to achieve common European goals.”
“I’m confident that we can get the first funds flowing during the summer.”
Debt will be issued by the Recovery and Resilience Facility (RRF), which will be allowed to raise up to €673bn through capital markets.
The latest estimates from the EU now have the bloc growing 4.2 percent this year and 4.4 percent in 2022, the EU will return to pre-pandemic levels of GDP by the end of the year. Gentiloni said this will be in no small part due to the RRF.
“The upward revision in our growth estimates announced in our last economic forecast is largely explained by the impact of the RRF.”
“The implementation of the RRF which alone, adds some 1.2 percent of GDP over the forecast horizon to 2022.”
The creation of common EU debt and the RRF is part of the EU’s broader recovery plan, Next Generation EU, which funds totals €750bn. Currently two-thirds of members states have submitted a recovery plan to the commission and Gentiloni expects the remaining third to come in over the next few days.
He added that the goal of the fund is not only to restart the EU economy but to “reshape it”.
“To make it more competitive, more sustainable and more inclusive.”
More than half of all recovery funds are being allocated to green and digital transformation, but Gentiloni said this would not be enough. He called on private sector capital and expertise to help drive the transition.
“We will need all the private sectors expertise and creativity for these projects, and we will need to mobilize private sector finance to meet the massive investment required for the green and digital transition.”
If Next Generation EU is successful, Gentiloni said it will serve as a “blueprint” for tackling future economic downturns.
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