10 Sep 2021

Public investment or fiscal consolidation after Covid-19?

The extreme case of Italy and Germany’s recovery and resilience plans

Daniel Gros / Francesco Corti / Pietro Regazzoni

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With the onset of the Covid-19 crisis, the debate on fiscal policies and the role of deficits in supporting growth has been completely revamped. Through its unprecedented recovery programme, all EU member states have developed comprehensive Recovery and Resilience plans (NRRPs) that will allow them to positively make use of billions of euros worth of economic support to build back stronger after the pandemic. This analysis compares the NRRPs of Germany and Italy, two countries that have very different views and priorities on how their allocation of the recovery funds should be spent and invested over the short, medium and long-term. This paper is a continuation of the CEPS series of assessments of national plans’ structural reforms and forms part of the CEPS Recovery and Resilience Reflection Project.