From the perspective of the German Federal Constitutional Court, NGEU is problematic in two respects. On the one hand, it could pose a threat to the overall budgetary responsibility of the German Bundestag and thus violate the constitutional identity of the Basic Law. On the other hand, due to the uncertainty of a suitable legal basis in Union law, an ultra vires act on the part of the EU cannot be ruled out.
At first sight, NGEU appears to strenghten the budgetary capacity of the Union, albeit on dubious constitutional ground. Following a closer look, a new intergovernmental vehicle is revealed, with deficient parliamentary backup.
I will not argue that the NGEU is contrary to the EU treaties. This we do not know, but the Court is not in the habit of annulling measures because they infringe on Member State sovereignty. What we do, however, know is that until 2020 the NGEU funding model was understood to require Treaty amendment by both the Commission and Council and their Legal Services. No Treaty amendment has taken place. However, the COVID-19 crisis presented too tempting an opportunity to overcome a Treaty obstacle that so far had appeared insurmountable. The situation raises a number of fundamental questions concerning constitutional scrutiny and the role of EU scholarship.
In the EU, there is no independent body, without a political master, to scrutinise legal compliance of new proposals with the Treaties prior to their adoption. Finding flexibility where it did not exist before involves a balancing act between the Union’s ability to respond to unexpected events and the stability of its constitutional framework. I argue, with reference to constitutional debates in Finland, that delivering results is not the only thing that counts; how you deliver them also matters. The real challenge for the Court will be to frame its judgment in a manner that maintains trust in the existence of proper constitutional control in the EU and assures the more sceptical audiences that the Treaties matter, even in cases where they constrain Union action.The role of the academia is equally important. When things that the Institutions previously considered contrary to the Treaties suddenly become possible, questions need to be asked. Critical debate is not about undermining the Union, but about making it stronger.
The EU’s post-Covid recovery plan (called NextGenerationEU or ‘NGEU’) constitutes a major shift in the EU’s macro-economic policy. It was made possible by a creative use of the ‘legal resources’ offered by the EU Treaties. The legal services of the EU institutions worked together to find the legal solutions that were needed to put the plan in operation, by endorsing a broad reading of EU competences (specifically, of Articles 122 and 175 TFEU) and a new practice in EU public finances (allowing the EU to engage in massive borrowing on the financial markets). The paper will present (and approve) this creative legal engineering.