A huge stimulus package plan worth 750 billion euro was announced by the European Union’s executive arm to support economies that have been battered by the novel coronavirus pandemic. EU executives hope that this package will also bring to an end all squabbling over how to fund a recovery that was being debated by member countries.
If the plan is ratified it would create a milestone in the half-century of the existence of the EU and the integration of Europe as the block moved towards mutualised debt as a major funding tool for the first time and creating a pathway for increased powers for the EU for taxation.
The plan also disperses the burden of recovery efforts as the central bank, the European Central Bank (ECB) is apparently now reaching its limits to actions and measures that it can take to ensure financial stability of the EU.
Paris, Berlin, Rome and Madrid reacted positively to the new proposal of the European Commission. The European Parliament also came out in support to the plan. There should be an effort to get the plan ratified before the summer break, the chairman of EU leaders said.
Two-thirds of the funds are to be disbursed in grants while the rest in loans after the Commission raised the money by borrowing from the market, according to the proposal. The stimulus will help to reduce the expected impact to the EU economy in the current year because of the pandemic.
Italy and Spain, the EU member countries worst affected by the pandemic, is set to receive a large portion of the funds.
“We either all go it alone, leaving countries, regions and people behind and accepting a union of haves and have-nots, or we walk that road together,” said Commission President Ursula von der Leyen.
If the EU is unable to rescue the member economies now in freefall, it could result in a situation that would be worse than their debt crisis of a decade ago which raised concerns of a division of the eurozone, the EU leaders have agreed.
But the pressure from the “Club Med” group to make a plan for mutual debt was opposed by the fiscally conservative northern countries. The single market of the EU has a total population of 450 million people.
The plan was described as a starting point for negotiations by Austria, which is one of the countries that have argued against grants.
“There are countries that must pay, like the Netherlands, the Swedes, the Danes and us. We therefore, out of responsibility to our taxpayers, say clearly that we are in favour of loans,” said Austrian Chancellor Sebastian Kurz.
Those supporting the claims for grants have argued that the countries of Italy, Spain, Greece, France and Portugal are already under huge debts and are heavily dependent on tourism which has come to a virtual standstill because of the coronavirus pandemic.
(Source:www.ft.com)
If the plan is ratified it would create a milestone in the half-century of the existence of the EU and the integration of Europe as the block moved towards mutualised debt as a major funding tool for the first time and creating a pathway for increased powers for the EU for taxation.
The plan also disperses the burden of recovery efforts as the central bank, the European Central Bank (ECB) is apparently now reaching its limits to actions and measures that it can take to ensure financial stability of the EU.
Paris, Berlin, Rome and Madrid reacted positively to the new proposal of the European Commission. The European Parliament also came out in support to the plan. There should be an effort to get the plan ratified before the summer break, the chairman of EU leaders said.
Two-thirds of the funds are to be disbursed in grants while the rest in loans after the Commission raised the money by borrowing from the market, according to the proposal. The stimulus will help to reduce the expected impact to the EU economy in the current year because of the pandemic.
Italy and Spain, the EU member countries worst affected by the pandemic, is set to receive a large portion of the funds.
“We either all go it alone, leaving countries, regions and people behind and accepting a union of haves and have-nots, or we walk that road together,” said Commission President Ursula von der Leyen.
If the EU is unable to rescue the member economies now in freefall, it could result in a situation that would be worse than their debt crisis of a decade ago which raised concerns of a division of the eurozone, the EU leaders have agreed.
But the pressure from the “Club Med” group to make a plan for mutual debt was opposed by the fiscally conservative northern countries. The single market of the EU has a total population of 450 million people.
The plan was described as a starting point for negotiations by Austria, which is one of the countries that have argued against grants.
“There are countries that must pay, like the Netherlands, the Swedes, the Danes and us. We therefore, out of responsibility to our taxpayers, say clearly that we are in favour of loans,” said Austrian Chancellor Sebastian Kurz.
Those supporting the claims for grants have argued that the countries of Italy, Spain, Greece, France and Portugal are already under huge debts and are heavily dependent on tourism which has come to a virtual standstill because of the coronavirus pandemic.
(Source:www.ft.com)
