The risk of very high import content in recovery plans

The euro-zone countries will all implement recovery plans, individually and also through the European Union. The objective of these plans will be to boost consumption, corporate investment, struggling sectors and also to accelerate the energy transition. One major risk for all countries - and for the euro zone as a whole - is that these recovery plans could have a very high important content: what do households buy when income is transferred to them? Where do companies’ capital goods come from? Where is the equipment used in renewable energies produced? How can this risk of “ wasting ” recovery plans on imports be mitigated? By: Targeting the recovery plans towards goods and services produced domestically; Introducing a CO 2 tax at the EU border; R apidly reshoring the production needed to meet the additional demand arising from the recovery plans. But reshoring production usually takes a long time.