John Dolan: A half-trillion Covid bill that could make or break the EU

The amount of money we as a nation spend, and the amount we tax people, will come into sharper focus in the years ahead, as our economy tries to recover from the pandemic shutdown. So says John Dolan
John Dolan: A half-trillion Covid bill that could make or break the EU

MONEY-GO-ROUND: Amazon founder Jess Bezos could be the world’s first trillionaire by 2026. In other news this week,the EU announced plans for a half a trillion euro grant to steer the continent through the post-Covid era.

IMAGINE you had a crystal ball and were gazing at what life is like in six years’ time. What would you see?

In 2026, will we still have our jobs, will we still be driving cars and going on holiday? Heaven forbid, but will we still be fighting Covid-19? Perish the thought...

Then, as the clouds part in the crystal ball, you spot a news headline: ‘Jeff Bezos becomes the planet’s first trillionaire’.

According to one report this week, that is actually well within the realms of likelihood, based on the Amazon founder’s current net worth and growth rates on it for the years ahead.

Of course, Amazon, a go-to site for online shoppers — a bit like a parasite living off its hosts before squeezing them to death, I suppose — has had a good pandemic. A captive global audience with a few quid to spend and nothing to do but stare at a screen is Manna from heaven for Bezos and his 800,000 employees.

Even so, becoming the world’s first trillionaire would be a remarkable feat. Even the Roman oligarch Crassus was only worth an estimated €10billion in today’s money.

A trillion is serious loot.

It takes 11 days to count to a million, and 31 years to count to a billion.

To count to a trillion — which is 1,000 billion — would take you almost 32,000 years.

Bet your Credit Union nest egg is starting to look a bit paltry now, huh?

The morality of one man having so much personal wealth is, of course, open to question.

Shouldn’t Bezos, and his phenomenally successful company for that matter, be paying far more tax? Is he under a moral obligation to spread his wealth?

The amount of money we as a nation spend, and the amount we tax people, will come into sharper focus in the years ahead, as our economy tries to recover from the pandemic shutdown.

How will we go about it?

All we have to go on in Ireland are a slew of three-month-old election promises that are not worth the paper they were written on — if they were even at the time of polling day — and the vague pledges of a bolted-together, would-be coalition of convenience, who seem to think some kind of Utopian society is going to be conjured up out of the Covid-19 outbreak in which everyone will work and everything will be free, including money.

Luckily for us, then, we have the European Union to make all the really important decisions.

All of which brings me neatly to the attempt by the EU this week to bail us out of the inevitable economic dark days that lie ahead.

Now this is a matter of vital national importance — so, of course, our own political leaders, most of whom were roundly rejected by the electorate way back in Covid-free February, didn’t come within an ass’s roar of the discussions.

No, it was the usual suspects who got their heads together to decide Ireland’s future — to wit, the French leader Emmanuel Macron and German Chancellor Angela Merkel.

Far away from the prying eyes of elected MEPs, media, and the elected leaders of other EU countries, they did what they always do when matters of great continental importance land in their in-tray. They thrashed out a deal that mutually benefits them both and presented it as a fait accompli, as they say in France.

Et voila — it was announced that Ms Merkel and M, Macron had decided on a €500 billion plan to help steer Europe through the virus aftermath.

Yes, that’s half a trillion in new money.

There were a few interesting strings attached to this mind-boggling sum. It would not be a loan as such, but a grant, handed out to pandemic-stricken regions and industries. The money would reportedly be spread out over 40 years. The downsides?

Many concluded that this would mean asking bloc nations that contribute to the EU budget, including Ireland, for a higher annual stipend in the years ahead — a situation that was inevitable anyway with the departure of the UK.

We can also expect increased calls for an EU-wide tax regime that doesn’t allow the likes of Amazon to rack up such huge sums — just this week the EU singled out Ireland as one of the worst offenders here.

There are also plenty of unanswered questions around the EU Covid plan: How will the money be borrowed, how will it be paid back, and what are the rules for allocating it?

The €500 million bail-out — sorry, grant — is an ambitious proposal, alright, but you can see the attraction for France and Germany.

The former, which has suffered badly from the virus, would have access to large grants to help it back on its feet, while Germany, which dealt remarkably well with Covid-19, would not be the usual fall guy stumping up all the cash — just a hefty fraction of it.

It appears like a classic Franco-German compromise.

However, there are plenty of stumbling blocks ahead.

Early indications are that the more frugal northern EU countries are not happy to be once again asked to support the less frugal southern states.

Meanwhile, eastern nations like Poland fear they will be saddled with debt to pay for their richer neighbours’ economic recoveries.

The Franco-German plan — which will be officially tabled by the European Commission next week — needs the support of all 27 EU countries and the European Parliament, which at present seems a tall order.

It’s no exaggeration to say this will be a pivotal few weeks for the future of the European Union.

It’s fair to say the bloc was irrelevant during the Covid-19 pandemic, as each country looked after its own. If the EU can’t thrash out an economic solution to this, its irrelevance will be crystalised.

You would expect Leo Varadkar, never one to say No to Brussels, to be one of the first out of the blocks to support this EU plan — and perhaps this grant will work out cheaper for us than loaning the money ourselves anyway.

But the extra annual payments to the EU will not be welcome as we try to kick-start our recovery.

As an added frisson, both Macron and Merkel may not be around for much longer to see through their blueprint.

The former is struggling in the polls and perceived as having failed to prevent Covid-19 gripping his country. The latter is due to stand down in autumn, 2021, but her party may force her out sooner.

The EU, then, is stood at a crossroads. This week, Merkel issued a rallying cry for an EU she has largely formed in her own image and stated: “The nation state alone has no future.”

Is she right? Will she and Macron get the deal through and put the EU on track for a stronger united future, at a time when rival blocs such as the U.S and China are more aggressive than they have been for a generation?

It remains to be seen.

However, it’s surely interesting to note that by 2026, Jess Bezos may be worth twice as much as that EU Covid grant. Perhaps he can pay it off for us early?

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