Brussels wants a recovery fund of 750 billion, the majority of which consists of donations
The European Commission wants to allocate € 750 billion to combat the economic consequences of the corona crisis, Commission President Ursula von der Leyen announced on a press conference on Wednesday. The package must pull the European economy out of the doldrums again, as the block is heading into a deep recession.
Two-thirds (500 billion euros) of Von der Leyen’s billions package is filled with gifts for member states. These amounts therefore do not have to be repaid. The rest of the amount (250 billion euros) consists of loans on attractive terms. The recovery fund, which is called the Next Generation EU, is in addition to the previously agreed European safety nets totaling 540 billion euros.
“The gifts are investments in our common future and have nothing to do with the debts of past member states,” said von der Leyen, referring to criticism from northern member states such as the Netherlands. “This package is for all of us.”
With the aid fund, the European Commission wants to prevent the economic differences between countries from becoming too great and the EU from becoming fragmented. Countries such as Spain and Italy, which traditionally rely more on tourism, will have more trouble restarting the economy than northern countries because of the corona crisis.
It remains to be seen whether the Commission proposal will be successful in all Member States. The Netherlands is strongly against gifts, among other things. On Saturday, the Netherlands, together with Denmark, Sweden and Austria, wrote a speech against gifts. The countries advocate a package of loans. According to these Member States, loans should only be granted if they are subject to reforms.
Recovery fund part of multi-year budget, discount maintained
The recovery fund should become part of the new European multiannual budget, the so-called multiannual financial framework (MFF). In addition to the 750 billion package, Brussels proposed a renewed version of the MFF on Wednesday. The budget, which runs from next year to 2027, would amount to 1.1 trillion euros in that proposal.
The Commission is now proposing a lower amount than in 2018, but the amount is higher than Charles Michel, the President of the European Council, suggested in February. The Netherlands rejected both proposals and was still against an increase in the MFF, partly due to the departure of the United Kingdom from the EU.
In the proposal, the Commission does meet critical northern countries. This way, the discount on the contributions will be maintained. In earlier proposals, the discount no longer occurred. “Due to the economic impact of the corona crisis, contributions to some Member States would increase disproportionately if the rebate is also cut,” the Commission writes.