EU Proposes 750B Euro Recovery Fund 05/27 06:20
The EU's executive is proposing a 750 billion-euro ($825 billion) recovery
fund to help the bloc's economy through the painful recession triggered by the
coronavirus pandemic, commissioner Paolo Gentiloni said Wednesday.
BRUSSELS (AP) -- The EU's executive is proposing a 750 billion-euro ($825
billion) recovery fund to help the bloc's economy through the painful recession
triggered by the coronavirus pandemic, commissioner Paolo Gentiloni said
Gentiloni, who is in charge of economic affairs at the commission, wrote in
a tweet that the move is "a European turning point to face an unprecedented
However, the 27-nation EU remains deeply divided over what conditions should
be attached to the funds, and Wednesday's proposal from the EU's executive arm
is likely to set off weeks of wrangling. Details of the proposal are due to be
unveiled later Wednesday.
The move comes with the world's biggest trading bloc set to enter its
deepest-ever recession as the impact from the coronavirus ravages economies.
Virtually every country has broken the EU's deficit limit as they've spent to
keep health care systems, businesses and jobs alive.
Earlier this month, the leaders of Germany and France historically, the
two main drivers of EU integration agreed on a one-time 500 billion-euro
($543 billion) fund, a proposal that would add further cash to an arsenal of
financial measures the bloc is deploying to cope with the economic fallout.
That plan would involve the EU borrowing money in financial markets to help
sectors and countries that are particularly affected by the pandemic. The
European Commission's blueprint is likely to resemble the Franco-German plan in
many ways while attaching the fund to the EU's next long-term budget.
The big question will be how much money will take the form of grants and how
much would be loans.
Austria, Denmark, the Netherlands and Sweden a group of countries dubbed
the "Frugal Four" for their budgetary rectitude are reluctant to see money
given away without any strings attached, and their opposition to grants could
hold up the project.
"Will it be grants or loans? And if it will be grants, who are going to pay
the grants? Loans, I think is a more interesting way forward to discuss, but we
also have to discuss under what conditions shall we give these loans," Swedish
Finance Minister Magdalena Andersson said Tuesday.
Whatever its content, the commission's plan is likely to spark heated debate
and the EU does not have time for the wrangling to drag on. The new budget
period begins on Jan 1, and countries across the bloc are desperate for funds
now. All 27 member countries must agree for the recovery fund to take effect.