Euromoney has delved deep into the detail of just how the EU might conduct the large new borrowing programme for the €100 billion emergency SURE programme and the €750 billion recovery fund that was agreed in July.
This programme was hailed as a breakthrough for joint sovereign issuance, with more heavily indebted and vulnerable nations receiving grants as well as loans at a cost subsidized by the credit strength of their wealthier neighbours.
But even if the EU funds this deftly on behalf of the European Commission, there is a much bigger and more important question.
Will it do any good?
Now, €850 billion is a respectable sounding sum of money. But as a one-off boost, it’s only around 6% of EU GDP for 2019. And while economies are tanking now, the recovery fund won’t even come into operation before next year. Recipient countries will be unlikely to receive grants and loans before 2022 or 2023.
How much confidence should investors in those countries’ stand-alone bonds, as well as in broader European equities, take from a temporary arrangement of modest size and delayed implementation?
They should probably take quite a lot.