The financial crisis, the migration crisis, the pandemic and lockdowns, the war in Ukraine, the disruption in global supply chains, exacerbated by our dependence on energy and raw materials.
These are many examples of a simple truth: when we show solidarity, we respond more effectively and are better able to protect our fellow citizens in the face of the challenges we face.
We emerged from the still painful experience of the pandemic thanks to the impressive NextGenerationEU recovery plan, the European Employment Promotion Fund «SURE» and the success of the joint management of vaccines.
But the current energy crisis and growing social unrest combined with record inflation and astronomical energy prices put us at a crossroads. It is an opportunity to reaffirm the principles of solidarity and common action – in will and in action.
We made a strong European response to Russian aggression in Ukraine. In the face of Moscow’s use of energy as a weapon of war, we have managed to break away from Russia by diversifying our energy supplies and increasing our strategic stockpiles in record time.
We urgently need to address energy costs, which are hitting homes and businesses hard in all Member States. For businesses, we must continue to coordinate our efforts to help them remain competitive and keep their jobs, while paying close attention to maintaining a level playing field in our single market.
In this context, the massive aid package of €200 billion (equivalent to 5% of GDP) decided by Germany is in line with the need we have called for to support the economy, but it also raises questions.
How can Member States that do not have the same fiscal space support businesses and households?
We must avoid fragmenting the single market more than ever, triggering a race for subsidies and challenging the principles of solidarity and unity that underlie our European project.
All the more so at a time when the United States is taking unprecedented action to attract investment under the Inflation Reduction Act to seek a coordinated response from us, and as the 27 seek to mobilize resources by addressing all debt to cope with the symmetric shock in energy prices, creditworthiness cannot be judged solely on the basis of its “observed” public debt.
This reference, which will remain the basis of our common budgetary rules, is certainly not exhaustive.
Indeed, this reference does not take into account the political choices of the past – which, however, make the present and the future of each of our states dependent on key elements of common interest for Europe, creating an asymmetric burden on national budgets: the disparate efforts made to defend the continent underinvestment in infrastructure, especially energy, which should benefit everyone, the reduced debt from greenhouse gas emissions when a Member State has invested to reduce the share of fossil fuels in its energy mix. All of these are joint account investments that, taken in isolation, reduce debt differentials between states and allow to objectify a debate about public finance management that sometimes tends to pit the good students against the bad, the virtuous against the bad the expensive to face.
It must be said that the reality is much more complex. This should be seen in the interest of European justice and solidarity.
Given the enormous challenges we face, there is only one possible answer: that of a Europe of solidarity.
In order to overcome the shortcomings caused by the different room for maneuver in national budgets, we have to think about common instruments at European level. Only a response from the European budget will allow us, by supporting the actions of the ECB, to respond effectively to this crisis and calm the volatility of the financial markets.
As we were able to do during the Covid crisis, it is up to us to create together and in a pragmatic way fair support mechanisms that preserve the integrity and unity of the single market, protect all European businesses and citizens and enable us together in this great crisis to advance. Taking inspiration from the “SURE” mechanism to help Europeans and industrial ecosystems in the current crisis could be one of the short-term solutions that pave the way for a first step towards delivering “European public goods” in the fields of energy and security paving is the only way to react systemically to the crisis.
Europe has already shown that it can respond strongly, overcoming divisions and pooling its budgetary powers at European level to demonstrate solidarity and justice.
This is the essence of our European project.
* Paolo Gentiloni is EU Commissioner for Economy
** Thierry Breton is EU Commissioner for the Internal Market