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At the end of May, France and Germany announced they are backing the creation of an EU bond to raise €500billion (£447billion) to boost the European economy, severely weakened by the coronavirus pandemic. The two leaders, Emmanuel Macron and Angela Merkel, unveiled their proposal in a joint video press conference. If approved, it would be the first time the bloc has pooled its debt in this way.
The measure immediately raised objections from the Netherlands, Austria, Denmark and Sweden, known as the “Frugal Four”, who support the establishment of a one-off emergency fund but do not back debt sharing or a significant increase in the EU’s next seven-year budget.
These four countries regard “mutualised debt” as a mortal danger because it would open the door to the dreaded Eurobonds – meaning Dutch, Swedish, Danish and Austrian taxpayers could become liable for the debt of other countries.
The pressure that the pandemic poses on the EU as a whole might work in favour of the Franco-German joint proposal, though.
Andrew Watt, head of the unit for European economic policy at the Hans-Böckler Foundation, said: “The Frugals, on paper, have a fairly strong position in the sense that this whole thing is located within the European Union budget.
Brexit domino effect: Four countries tipped to follow Britain out of EU in catastrophic move (Image: GETTY)
French President Emmanuel Macron and German Chancellor Angela Merkel in a videoconference call (Image: GETTY)
“In practice, though, none of them want to go down in the history books as the country that, faced with a pandemic, after all these countries have gone through, let them starve.”
The plan is, nonetheless, a dangerous step as according to Pepijn Bergsen, a research fellow at the London-based think tank Chatham House, it might spark a Brexit domino effect – at least, in attitudes towards the bloc.
In an entry for the London School of Economics (LSE) blog, he wrote: “The similarities with previous British positions in the EU are clear.
“The Frugal Four Prime Ministers value their rebates as much as Margaret Thatcher once did.
“It is not too much of a stretch to say that the current proposal would never have even made it to the table had the United Kingdom still been a member of the EU, as London would have almost certainly vetoed it.
“One of the arguments often put forward in favour of Brexit was that the UK should leave before it would inevitably get roped into the eurozone’s mess.
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Former Prime Minster Margaret Thatcher (Image: GETTY)
Dutch Prime Minister Mark Rutte (Image: GETTY)
“During the euro crisis, the UK largely avoided this fate, only contributing to the bailouts of Portugal and Ireland.
“But having to pay for economic support for the southern euro countries is exactly what is now being asked from non-euro countries like Sweden, Denmark and Czechia.”
Moreover, Mr Bergsen argued, the comparison with the UK is also instructive because the Frugal Four were often closely aligned with London in EU debates.
They broadly share the British focus on free trade and on the EU as an economic project, as opposed to its political dimension, as Germany more often tends to focus on.
The academic noted: “Just like the UK, the Frugal Four also tend to have relatively eurosceptic electorates, albeit ones that continue to indicate in polls that they would vote to remain in the EU if asked.
“The COVID-19 crisis has drawn attention to Italian voters and their disillusionment with the EU caused by the lack of support they experienced during their time of need in this pandemic.
“As Catherine de Vries, a preeminent scholar of public opinion on European integration showed on this blog, this does not mean they necessarily want to follow the UK out of the EU.
“If anything, they are instead asking for more Europe, in part out of dissatisfaction with the functioning of their own democracy.”
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Chancellor of Austria Sebastian Kurz (Image: GETTY)
In contrast, electorates in many of the frugal countries, Mr Bergsen claimed, tend to be relatively satisfied with their national governments and the state of their democracies, while significantly less enthusiastic about further political integration in the EU.
He explained: “Governments and politicians in the Frugal Four largely continue to talk about European integration in the way most British politicians used to, using it as a handy scapegoat for unpopular policy and blustering in Brussels mainly to satisfy their domestic audience.
“In the short run, this strategy has led them to clash with, not just most of the rest of the bloc, but also their previous ally within the EU – Germany.
“In the long run, such a strategy raises questions over how the Frugal Four will deal with the secular pressure for more integration within the eurozone, particularly for the Netherlands and Austria as Denmark and Sweden are unlikely to join the single currency anytime soon.
“Even in areas other than the euro, there will be a push for more integration.
“This will create conflict with the vision of the EU that many of these member states share with the UK, which is now no longer in the club helping them to push back against this direction of integration.”
Mr Bergsen concluded that a clear appreciation of their small size and heft in the world and their deep economic integration with the rest of the EU might discourage them from following the UK out of the union.
However, the current episode once again highlights “the difficulty of deeper integration” between countries with a very different vision for the future of the EU and a political class “unable, or unwilling, to try and shift their electorate’s stance on Europe”.