In this regard the midsummer European Council was a disappointment. Recent diplomatic actions however give a reason to expect that leaders of the European Union can agree on a European recovery fund soon. Combined with the individual member states’ fiscal stimulus, this would reinforce the recovery and better share the burden with monetary policy.
However, it is of paramount importance to use the fiscal stimulus for the intended purposes: for health care and employment, and for sustainable development and digital transformation. Using the funding on new permanent spending items, would be against its intended goals. That is why conditionality should be reinforced by explicitly bringing in the European Semester of economic policy making.