A move away from austerity towards Keynesian-style stimulus is underpinned by EU mutual bonds issue to the tune of €1 trillion
The populist uprising evident in 2016’s Brexit referendum and Donald Trump’s victory in the US spreads to Europe as Matteo Renzi’s referendum confirms the rise in anti-establishment sentiment and the Dutch election sees dramatic success for Geert Wilder’s PVV.
Facing a completely new political landscape in Europe, traditional political parties have a change of heart and acknowledge that they have not done enough to revive the economy and abandon their austerity programs. After a difficult start, the Juncker plan is on the right track but its total amount of €630 billion over six years is far from sufficient.
More and more countries consider the adequate answer to the economic and political crisis is to launch more ambitious Keynesian-styled measures inspired by the successful experiences of UK prime minister Neville Chamberlain and US president Franklin Roosevelt in the aftermath of the 1929 crisis.
Such a stimulus plan provides a large economic bang for the buck and significantly boosts growth. However, the benefit for countries following that road is likely to be diluted by an increase in imports if the plan is not coordinated at the European level.
In order to avoid this scenario, EU leaders announce an enormous issuance of mutual EU bonds, at first geared towards €1 trillion in infrastructure projects that reinforce the economic integration of the region and attracts massive amounts of capital inflows from investors regaining confidence in the future of the EU

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