The COVID-19 pandemic and Fiscal Union: The Case for the Establishment of a Permanent Supranational Fiscal Shock Absorption Capacity and Important Lessons to be Learned from SURE and NextGenerationEU

The contribution reflects on the need for a permanent supranational fiscal shock absorption capacity against the background of the recent EU response to the Covid-19 pandemic. First, legal, economic, and political arguments in favour of more robust EU fiscal capacity are presented. This is followed by an analysis to what extent main measures taken in response to the pandemic, namely the temporary EU Recovery Instrument and the Recovery and Resilience Facility at the heart of NextGenerationEU, as well as the European instrument for temporary support to mitigate unemployment risks in an emergency, should be considered as a blueprint for the establishment of permanent mechanisms. It is argued that the main value of the ad hoc crisis measures lies in the uncovering of the various political, economic, and legal considerations that must go into the design of a permanent supranational fiscal shock absorption capacity.