“On the surface, striking a deal on the EU recovery fund is a remarkable accomplishment. Achieving agreement amongst EU leaders on a €750 billion programme, which combines joint borrowing at the European Commission level with the provision of outright grants, certainly went above and beyond what most observers had considered possible only a couple of months ago.
“However, it is doubtful that we have witnessed Europe’s seminal ‘Hamilton moment’, I think. The painfully long marathon negations laid bare just how divided the EU is with regards to fiscal integration.
“The ‘frugal four’—Austria, the Netherlands, Sweden and Denmark—were only willing to accept the proposal after their respective EU budget rebates had been increased. This fact is important as it shows that the compromise is—at least in part—built on a one-off incentive for certain countries that cannot be repeated as often as one might like.
“In addition, we should not forget that chancellor Merkel has been one of the driving forces behind the EU recovery fund, protecting the proposal not least against critics within her own party and government. Chances are that her successor, whoever it will be, turns out to be distinctly less supportive and might pull Germany closer to the frugal four, thus making any further steps towards fiscal integration in the EU very challenging going forward.”