European Union unveils €750bn plan for coronavirus recovery

EU unveils €750bn plan for coronavirus recovery

"To protect lives and livelihoods, fix the single market, as well as to build a lasting and prosperous recovery, the European Commission is proposing to harness the full potential of the EU budget", the commission said.

Four EU officials and diplomats confirmed the split between grants and loans that the EU executive arm is due to announce today in the European Parliament, and one senior EU diplomat called the plan a "sensible" proposal.

The increased just transition fund would mean an extra 6 billion euros for Poland's coal-dependent regions, said the country's Climate Minister Michal Kurtyka.

There will be a 15 billion euro reinforcement for the European Agricultural Fund for Rural Development to support rural areas in making the structural changes necessary in line with the European Green Deal and achieving the ambitious targets in line with the new biodiversity and Farm to Fork strategies. "Europe can start the ball rolling by making hydrogen, Carbon dioxide and clean electricity infrastructure available to European industrial heartlands." said Keith Whiriskey Co-Director of Bellona Europa.

However, the plan, which requires unanimous support of member-states, will need to overcome some big hurdles.

She said: "It can not happen that poorer member states finance the wealthier ones".

The plan takes the commission into new territory, borrowing on capital markets on a far bigger scale than ever before.

But Chancellor Merkel, who has always argued that the mutual issue of debt is not allowed under current European treaties, found her room for manoeuvre even more restricted by a recent decision of Germany's Constitutional Court ordering the country's national bank to stop participating in a Europe-wide purchase of debt, similar to what the French-led scheme proposed to do. It wants this support to be operational from 2020, and is suggesting a budget of €31BN with the aim of aiming to unlock €300BN in solvency support for companies from all economic sectors (to "prepare them for a cleaner, digital and resilient future", as it puts it).

Worth 750 billion euros ($825bn), the blueprint envisions borrowing the funds and disbursing them as grants and loans to member states, with the lion's share of aid - some 313 billion euros ($344bn) - earmarked for Italy and Spain, the European Union member states worst affected by the pandemic.

Furthermore, according to estimates, with the leverage effect of the proposed 1.1 trillion multi-annual EU budget and the 750 billion of the Next Generation EU, the total investment that could be generated is over three billion, the EC sources said.

There's also more money for the InvestEU investment program which the Commission wants to see hitting €15.3BN over the budget period to spin up more private investment in projects across the EU.

"This is Europe's moment".

It also involves 94.4 billion euro for Horizon Europe, which will be reinforced to fund vital research in health, resilience and the green and digital transitions. Our willingness to act must live up to the challenges we are all facing.

And although the recovery plan - which Dr von der Leyen now dubs "Next Generation EU" - may sound impressive, it is still puny if compared with the economic tasks which lie ahead.

The European Council and co-legislators to examine the Commission's proposals with a view to reaching a political agreement at European Council-level by July.

There is fierce political opposition to the scheme from rich northern European countries tired of such massive cash transfers to poorer EU member-states.



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