Plans to reintroduce the straitjacket of fiscal rules, at a time when the union faces exceptional challenges, are a mistakeAs last week’s fraught summit discussions on Ukraine underlined, the European Union faces daunting and costly challenges in the years ahead. The decision to open membership talks with Kyiv was both a welcome affirmation of continued solidarity and a recognition of the reality that Europe’s security is intertwined with Ukraine’s resistance to Vladimir Putin’s revanchist ambitions. But talks about a new £50bn aid package have had to be prolonged into the new year, following Viktor Orbán’s blocking tactics in Brussels.Eventually, some kind of modern Marshall plan will be required to reconstruct a shattered country. That will be a very expensive business. Similarly, achieving the ambition of making Europe the first climate-neutral continent by 2050 will require a massive injection of public funds. The European Commission estimates that about €700bn a year will need to be invested to meet the EU’s green targets. That kind of fiscal firepower will be difficult to sustain after the EU’s Covid recovery fund dries up in 2026. Continue reading...