“It is very welcome that the Federal Audit Office has made the wide-ranging consequences of the new EU debt instrument transparent. The German Bundestag has so far been unwilling to face the full implications of the pandemic recovery plan and to openly communicate the substantial risks involved. The fact that the recovery package will be entirely financed with borrowed funds and essentially impose joint liability on all Member States is indeed a departure from the principles that have guided German EU policy so far. During the euro debt crisis, the Bundestag still put considerable emphasis on introducing measures that strictly limit the liability risks imposed on the national budget. Now, it has agreed to a stimulus package that will not only allow the EU to finance the recovery plan through debt, but most likely pave the way for large-scale EU borrowing. While the pandemic might provide good reasons to take this course of action, we must not forget the risks that this entails for the federal budget.
My recommendation for the Bundestag is to include a clear commitment in the ratification act of the EU own resource decision that the joint borrowing will be a one-off exceptional measure. This would send an important signal in the European discussion over financial policy – especially since the president of the European Parliament has spoken in favour of making EU deficit financing permanent.”