Combating the COVID-19 Crisis within the European Union: A Critical Assessment of the ‘Next Generation EU’ in the Context of the Budgetary Balance

Abstract

The paper contains a critical analysis of the new system of own resources of the European Union, established to address the consequences of the COVID-19 crisis. Analysis is mainly from the perspective of the balanced budget rule. Under Council Decision 2020/2053 of 14 December 2020, the Commission is to be, inter alia, empowered to borrow an unprecedentedly huge amount of funds on capital markets on behalf of the EU. This means that, for the first time in history, common budgetary commitments on the part of the EU will be on such a scale that repayment will be spread over many years and will be charged to future generations of EU citizens (known as the ‘Next Generation EU’ programme). The research aims to compare these innovations with the long-term financial policy of the EU, as a result of the provisions of the Treaty on the Functioning of the European Union and the Fiscal Compact. It also elaborates on the limits of societal debt issued by their representatives who form public authorities.