The European Council has come to a compromise on the European recovery support, after four days of negotiations. The main pillars
as proposed by Macron and Merkel some time ago still stand – joint financing and an important grant element. But the grant amounts have gone down and several forward looking programmes, including support for climate change, have been reduced. So, is
this a glass half empty or a glass half full? Taking the viewpoint that a year ago none of this would have been even imaginable is a valid point if one takes the long-term view towards a slow move towards European fiscal policy integration. As my good
friend Sony Kapoor points out, however, this does not take into account that the COVID-19 crisis constitutes an enormous risk to the whole European project, starting with the euro, if
there is asymmetric recovery and divergence across the EU (and again, especially the euro area). Many economists, including yours truly, have
therefore called early on for a joint recovery effort on the European level, on economic, political and social grounds. And as ten years ago with the banking union, when these calls were first dismissed as unrealistic, it ultimately did happen. Angela Merkel
and Emmanuel Macron have stepped up to the challenge.