EU member states must share the burden of the fiscal costs of the COVID-19 pandemic. Otherwise some member states will become overwhelmed by the debt burden at the end of the crisis. In this policy paper, Sebastian Grund, Lucas Guttenberg and Christian Odendahl propose a Pandemic Solidarity Instrument to deliver such burden sharing. Under the instrument, the EU would borrow 440 billion euros in the market and would give it as grants to member states for specific spending in areas such as health care, short-time works schemes or stimulus packages; it would also give guarantees to the European Investment Bank to provide liquidity to European companies. The policy paper also includes a detailed legal analysis on how this instrument would work under EU law.
Sebastian Grund is a Fulbright Scholar and LL.M. candidate at Harvard Law School and holds a PhD in International Financial Law, University of Vienna.
Christian Odendahl is chief economist at the Centre for European Reform, working on European macro policy and economic integration.