Covid-19: European Commission proposes recovery fund of 750 billion euros

The European Commission is proposing a recovery fund of 750 billion euros to deal with the economic crisis in the EU caused by the coronavirus pandemic, announced on Wednesday May 27, the EU Commissioner for Economic Affairs, Paolo Gentiloni.

The creation of this fund, added to the other stimulus instruments, is "a European turning point to face an unprecedented crisis", commented the Italian commissioner on his Twitter account.

Italy and Spain, main beneficiaries

According to a European official quoted by Reuters, the major part of this recovery plan would be reserved for Italy and Spain, two of the countries most affected by the epidemic. Out of a total of 750 billion euros, 173 billion euros would be released for Italy (82 billion euros in direct aid and 91 billion in the form of loans). Spain would be offered 140 billion (77 billion in direct aid and 63 billion in the form of loans).

Commission proposes a Fondo di Recovery da 750 miliardi che si aggiunge agli strumenti comuni già varati. Una svolta europea per fronteggiare una crisi senza precedenti. #NextGenerationEu

Even before its official announcement, this plan, which will be presented by the President of the Commission, Ursula von der Leyen, underlined the still sharp dividing lines between the Member States on the tools to be used to help countries and sectors most affected by the crisis.

On the one hand, France and Germany who proposed on May 18 the creation of a stimulus fund endowed with 500 billion euros raised by the Commission, which would grant budgetary aid to the regions and states of the Union most affected by the new coronavirus crisis.

These sums would be borrowed on the markets by the Commission at more advantageous rates than what would get states in difficulty in public finances like Italy or France.

On the other hand, the so-called "frugal" states, such as Austria, the Netherlands, Denmark and Sweden, reluctant to the idea of ​​simple budgetary transfers to Member States, prefer the option of loans (repayable ) to the most affected States.

FR NW GRAB ALIX LE BOURDON EUROPEAN BOOST PLAN 16H

Balance sought between grants and loans

In recent days, the European Commission has assured that its recovery plan would respect a strict balance between grants and loans, without giving more details.

The stimulus will be backed by the EU's 2021-2027 draft budget - known as the multiannual financial framework - of around € 1 trillion, which will also be presented on Wednesday by the executive body of the Union.

The Commission's project will be on the agenda for the next European summit, on 18 and 19 June.

French President Emmanuel Macron immediately welcomed the recovery plan presented by the European Commission, and called on his European partners to "go fast" by adopting an "ambitious agreement".

"Essential day for Europe," he wrote on Twitter. "We must go quickly and adopt an ambitious agreement with all our European partners."

Essential day for Europe: @vonderleyen offers an original recovery plan of € 750 billion for regions and sectors in difficulty. The Franco-German agreement allowed this advance. We must go quickly and adopt an ambitious agreement with all our European partners.

"Let's put aside old prejudices !"

On Wednesday, in a speech in Brussels to MEPs, the president of the European Commission, Ursula von der Leyen, called on Europeans to "put aside old prejudices" and support her recovery plan.

While the plan arouses the reluctance of some Member States including the Netherlands, Denmark, Austria and Sweden, Ursula von der Leyen explained that the Commission intends to raise 750 billion euros on the financial markets on behalf of the EU, a total of which "500 billion will be distributed in the form of grants and 250 billion in the form of loans to member states".

However, she added that these subsidies would constitute "an investment" for the future, in the priorities of the EU: "strengthening the internal market, digitization (of the economy), the European 'Green Deal' and resilience".

"This is an urgent and exceptional necessity for an urgent and exceptional crisis," she insisted. "Let's put aside the old prejudices!", She implored. "It is the time of Europe", continued the president of the European Commission, at a time when "divergences and disparities are widening" on the continent.

With AFP and Reuters

The France 24 week summary invites you to come back to the news that marked the week

Take international news everywhere with you! Download the France 24 app