EU should finance common goods jointly, says ECB’s Knot

The European Union should centralise more of its budget spending, especially for common goods, as that would relieve the burden on more indebted countries and promote convergence, Dutch central bank chief Klaas Knot said on Thursday.

The EU has experimented with joint borrowing and spending in the aftermath of the pandemic but some nations, particularly Germany, resist calls for a closer fiscal union on fears that the German taxpayer could be forced to pick up the bill for perceived budget irresponsibility elsewhere.

Knot, the Chair of the Financial Stability Board, a global advisory group, argues that the entire bloc would benefit because joint spending lowers economic differences and provides a buffer during shocks.

"From a political economy perspective it also makes sense to ensure the provision of European common goods, such as climate, energy or defence,...