The writer is the founding director of the Institute for Innovation and Public Purpose at University College London
Two weeks ago, the European Council summit concluded with a historic agreement on a recovery fund. It represents a turning point for the EU: for the first time, the bloc will be allowed to borrow on behalf of its member states. The European Commission is now set to raise €750bn on capital markets, to be distributed through €390bn of grants to member states and €360bn of loans. This money is earmarked for the sole purpose of addressing the consequences of the Covid-19 pandemic.
Securing the agreement of 27 member states was not easy, and the outcome is far from perfect, but the real challenges are still to come. The commission must now resist pressure to slide back to doing business as usual. It must find ways to transform the European economy, making it greener, more inclusive and more resilient to future shocks. The risks of failing to do so are huge: the response to the 2008 financial crisis left the eurozone fractured and hindered economic recovery.
The most encouraging element of the agreement is that, rather than focusing on deficit reduction (as after the last crisis), the priority this time is on strategic investments in climate and digitalisation. The