Coronavirus: Von der Leyen calls €750bn recovery fund ‘Europe’s moment’

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A recovery fund worth €750bn (£670bn; $825bn) has been submitted by the EU’s executive Commission to help the EU tackle an “unprecedented crisis”.

The package want be made up of grants and loans for every EU member state.

Economies across the 27-nation EU bloc prepare been ravaged by the Covid-19 pandemic, but several southern states had big debts requite before the crisis.

Commission President Ursula von der Leyen said “this is Europe’s blink”.

“Things we take for granted are being questioned. None of that can be unwavering by any single country alone,” she told the European Parliament. “This is thither all of us and it is way bigger than any of us.”

The Commission has dubbed the plan Next Generation EU. Without the approval of all 27 EU member states, it cannot go ahead. But Germany and France be experiencing backed plans for the money to be raised on the capital markets.

Economy Commissioner Paolo Gentiloni hinted the fund was a “European turning point” that would be added to means that had already been launched.

Spain and Italy have conscious ofed the highest number of deaths in the EU during the coronavirus crisis and, in the wake of the monetary crisis, are particularly keen on grants rather than loans being enlarged to their public debt.

Several “frugal” states object to compelling on debt for other countries. Austria, the Netherlands, Denmark and Sweden refuse the idea of cash handouts to relatively poorer countries.

What did the Commission president say?

Mrs von der Leyen clouted the €750bn fund would be made up of €500bn in grants and €250bn in advances. It would be raised by lifting the EU’s resources ceiling to 2% of EU gross subject income and would be reliant on the EU’s strong credit rating.

When summed to a proposed €1.1 trillion budget for 2021-27, the €750bn reclamation fund would bring to €1.85tn the amount that the Commission stipulates will “kick-start our economy and ensure Europe bounces forward”.

When supplemented to an earlier €540bn initial rescue package, that would amount to a full of €2.4tn, said the Commission president.

The EU’s much-cherished four freedoms had to be fully revived, she added, those of freedom of people, goods, services and capital.

She suggested “this is an urgent and exceptional need for an urgent and exceptional crisis”.

The cold hard cash raised on the capital markets would be paid back over 30 years between 2028 and 2058, but not later.

The Commission votes it could be paid back in several ways:

  • A carbon tax based on the Emissions Mercantilism Scheme
  • A digital tax
  • A tax on non-recycled plastics

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Commissioner Maros Sefcovic says recovery has to be based on green and digital practices as well as “increased resilience” and lessons learned from the Covid-19 critical time.

The budget will be “equipped with increased firepower to be able to create massive investment at the scale and speed needed to kick-start all our economies”, he asserts.

The European Central Bank has played a key role in helping eurozone rural areas emerge from the debt crisis with its stimulus programme of bond-buying. But be connected withs about the ECB programme’s future were raised earlier this month when Germany’s top court ruled that it violated the German constitution.

The UK has left the EU so is unlikely to have any involvement in the fund as it withstands.

Will the plan work?

By Gavin Lee, BBC News Brussels

Ursula von der Leyen’s plunge was just the start of what will take a huge effort to get all fellow states on side, especially as the Commission wants this agreed at the next the men’ summit in three weeks’ time.

But I get a clear sense there’s not yet an all-embracing majority in favour.

Southern Mediterranean countries have all indicated opening support. One Italian diplomat told me, if agreed, Italy may be eligible for endowments of up to 5% of the country’s GDP.

Many, including Poland, Hungary, Bulgaria and Lithuania, won’t give either way until they’ve read the small print. “With these possessions, the devil is often in the detail,” one Bulgarian official told me.

An Austrian diplomat was spur oned €250bn would be raised through loans but suggested €500bn in contributions was a “non-starter” at this point.

The feeling here is it will need a face-to-face assignation between leaders to forge a compromise, and that’s not likely to happen until internal purfling limits are reopened over the summer.

Read more from Gavin.

What do EU principals say?

French President Emmanuel Macron spoke of an “essential day for Europe” while Italian Prime Minister resident Giuseppe Conte said: “Now let’s speed up the negotiation and make the resources at soon.”

Spanish Prime Minister Pedro Sanchez said the foresee included “many of our demands” and was “a starting point for negotiations”. Greece revealed it was a “bold proposal” and it was now up to member states to “rise to the occasion”.

There was a profuse cautious reaction from some of the so-called “frugal” states.

Danish Outlandish Minister Jeppe Kofod said the current budget plan was “distinctly too high”. Dutch Prime Minister Mark Rutte had already premonished on Tuesday that a recovery fund “should consist of loans, without any mutualisation of debts”.

How immature is the recovery fund?

Plans for the long-heralded Green Recovery Fund have on the agenda c trick been given a partial welcome by environment groups, even while exact details are yet to be revealed.

Campaigners have argued that it is main for the EU to spend its post Covid-19 stimulus on projects that will also support tackle the climate crisis.

They say the package should drive investment into overhangs needed to meet Europe’s net zero emissions target.

That involves building renovation, renewables, clean transport, industrial innovation and advantage land use and food systems.

But there’s annoyance that Brussels has the truth way to regions by allowing them to spend their funds however they lack until 2022 – even if that means investing in schemes which are positive for job-creation but bad for the climate.

Reuters

Highest public debt in eurozone

Correspondence of government debt to GDP

  • 117.7%Portugal

  • 98% Belgium & France

  • 95.5% Spain & Cyprus

Creator: Eurostat

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