On the institutional side, the EU fiscal framework (which had been revised in 2005) was too weak and not implemented with sufficient rigour. Reflecting large fiscal imbalances and a loss of investor confidence, government bond spreads increased drastically for some euro area countries and became very volatile in 2010. The willingness of investors to support government financing needs declined.
[7] Much of this will be financed at the European level through the EU Member States’ national recovery and resilience plans as part of the Next Generation EU programme that was set up to support the recovery from the COVID-19 pandemic.