Nordic Businesses Warn of ‘Crazy’ Outcome If EU Aid Misspent

The European Union risks squandering the potential of its recovery fund unless spending is properly policed, according to the biggest business lobby groups in eight Nordic and Baltic countries.

The 27-member bloc agreed on a 750 billion-euro ($907 billion) pandemic relief package in December to help end the worst recession on record. The money is also supposed to support digital and climate-related innovation, amid concerns the region is falling behind.

But in Europe’s north, there’s growing anxiety over a lack of accountability, despite the fact that payments are attached to conditions. Fredrik Persson, Chairman of the Confederation of Swedish Enterprise, says the European Commission should define quantifiable goals for a recovery scoreboard that would be part of the EU executive’s regular reviews. He says such a scoreboard should be public, so that everyone can see what national governments are doing.

“The time aspect is the biggest challenge. If properly invested, 750 billion can be just right,” Persson said in an interview. “If badly invested, it can be a totally crazy amount.”

It is “impossible” to say whether the size of the package, designed before the EU was dragged into a new infection wave, will be enough to cover the fallout, he said.

The spending plans, which still need the consent of the bloc’s national parliaments, will allow the EU to issue the commonly backed debt that it will then hand out to its members in grants and concessional loans. Sweden, one of four EU nations seeking a “frugal” approach, has pressed for assurances that the program will only be temporary.

Sweden expects to tap only the grants, with the maximum amount seen at 30 billion kroner ($3.6 billion) to 40 billion kronor in fixed prices, it said last month. National plans are due to be submitted by the end of April.

Fuzziness over objectives and overloaded procedures can derail the recovery fund, Bruegel, a Brussels-based think tank, said last October, urging the EU to adopt clear conditions when linking reforms and investments.

“Worst case, the funds might end up used as general budget contributions to each country and that it all disappears into the national budgets,” Persson said. He cited a consensus on the issue among groups representing employers in both the Nordics and the Baltics.

©2021 Bloomberg L.P.

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