Luxembourg’s finance minister Pierre Gramegna: “It is important that we have a European dimension to these investments that we want to finance” © Bloomberg

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Europe must focus its €750bn post-Covid recovery spending on projects of real cross-border value, Luxembourg’s finance minister has warned, saying that national haggling over funds should not be allowed to derail broader objectives. 

Pierre Gramegna, one of the three candidates to become the next president of the eurogroup of finance ministers, told the Financial Times that the importance of recovery fund money going to projects that truly support the continent’s green and digital transitions “has not been highlighted enough”. 

“As we are talking about hundreds of billions of euros that need to be invested in this twin transition, I think that it is important that we have a European dimension to these investments that we want to finance,” he said. “We should not only look at these investments on a national basis: what does this country get, what does this other country get. We should also have a cross-border approach on how this money is spent.”

The spending of that money, and the eurozone’s broader recovery efforts, will be top issues in the next eurogroup president’s in-tray. EU leaders will meet at the end of next week to try to hammer out a deal on the plans, which are wrapped up with negotiations on the bloc’s next seven-year budget. 

Much of the attention in the negotiations has focused on the allocation criteria used to share out recovery money that the EU will borrow on the capital markets, with national diplomats poring over documents showing the knock-on effect they could have on the amounts flowing to specific countries. 

The plans are also facing resistance from some of the main net-contributors to the EU budget — the so-called Frugal Four of Denmark, Austria, the Netherlands and Sweden — which are opposed to Brussels’ plan to disburse a substantial chunk of the recovery money in grants rather than loans.

Mr Gramegna, whose own country’s strong economic fundamentals mean that it is unlikely to be a large recipient of EU recovery funding, said the use of the money needed to be “efficient”.

“When you think of it, the digital transition, that’s infrastructure needs. If you think of climate change, well it's useless that one country does something and many others don't.”

One of the longest serving finance ministers in the eurozone, Mr Gramegna is nonetheless seen as the underdog in the eurogroup contest, which will come to a head when ministers vote on Thursday. 

With current president Mário Centeno of Portugal standing down, the other candidates to replace him are Spain’s Nadia Calviño, who has support from France, Germany and Italy, and Paschal Donohoe of Ireland, who belongs to the EU’s large centre-right political family, the European People’s party. 

Whoever wins will take on one of the most important policymaking roles in the eurozone, chairing monthly meetings of the body that handles everything from economic convergence to the politics of sovereign bailouts. 

Mr Gramegna pointed to his record as a veteran of the eurozone sovereign debt crisis, and as a bridge builder among the group’s different members.

“I’m the most experienced finance minister of the three, having been in the eurogroup for more than six years, having lived through the euro crisis, the Greek crisis, having been part of all major decisions,” he said, noting also his background as a professional diplomat.

Asked if he was staking out similar territory to Mr Donohoe, also from a smaller, economically liberal country, Mr Gramegna said it could be argued that Luxembourg had shown more “flexibility” on some policy issues, including on French-backed plans for a European digital tax.

Mr Gramegna said the economic recovery would be far from the only issue on the eurogroup’s agenda in the months ahead. Continuing challenges, he said, included the completion of the currency area’s banking union, work on creating a single European capital market and promoting the international role of the euro.

“The euro has overcome its teenage crisis,” he said, in reference to the years of strain that followed the 2008 financial crash. “If we see the international tensions that exist between Europe and the United States, between the US and China, and also to a certain extent between China and Europe, the only way we can make our continent stronger is by strengthening the euro, the euro area and the European Union.”

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