The transformation of EU economic union: how enhanced central fiscal capacity sows the seeds for the future

By endowing the European Union (EU) with enhanced central fiscal capacity, Next Generation EU (NGEU) marks an important shift in supranational economic policy. The EU has evolved from intergovernmental coordination and fiscal surveillance of Member States, to disposing of a more robust, autonomous, and effective instrument for intervention in the EU economy. These improvements derive from some notable innovations NGEU brings about. However, this instrument also holds several shortcomings usually associated with the EU budget, namely regarding the nature of funding, the type of expenditure, and the overly intergovernmental legislative process. Accordingly, NGEU is described as a bridge between past and future. The paper analyses each of these issues by looking at the United States of America (US) experience and finds that the parallelism that is possible to draw in the different matters is substantial and could serve as a useful inspiration for the EU going forward. Lastly, the financial component of the Draghi report on the future of European competitiveness is also addressed, as it suggests that this recent experience may be a useful blueprint for the future of EU finances.