Breaking News

Europe revived by a 500 billion euro plan

France and Germany have proposed a financial device to help the European Union overcome the historic crisis caused by the coronavirus pandemic. This plan, not yet accepted, would go through a new mechanism for pooling European debt.

France and Germany have proposed a financial device to help the European Union overcome the historic crisis caused by the coronavirus pandemic. This plan, not yet accepted, would go through a new mechanism for pooling European debt.

(AFP) – “To support a sustainable recovery that restores and strengthens growth in the EU, Germany and France support the creation of an ambitious, temporary and targeted stimulus fund” as part of the next EU budget EU with 500 billion euros. This was the joint statement of the German Chancellor and the French President on Monday evening. Both Paris and Berlin propose that this support be financed by loans from the Commission on the markets “on behalf of the EU”.

This money will then be transferred into “budgetary expenditure” to European countries and to the sectors and regions most affected, underlines the text of the Franco-German couple. “These 500 billion will not be reimbursed by the beneficiaries of those who use this money,” said French President Emmanuel Macron. “These will not be loans but grants” direct to the countries most affected, hammered Emmanuel Macron.

The political significance of such a proposal is very strong, for an EU which was torn apart, almost to the breaking point, during the financial crisis and the Grexit, on the thorny question of the mutualisation of debts. “This is really important,” reacted on Twitter Jacob F Kirkegaard of the Peterson institute for International Economics. “Historical signal” for Henrik Enderlein, director of the Jacques Delors Center in Berlin. For economist Jean Pisani-Ferry, it is a “reboot for the Franco-German couple. Impressive. Now begins the hardest part: the negotiation of the EU-27 ”.

Such a plan would thus constitute an unprecedented step towards a pooling of debt at European level, to which Berlin but also the countries of northern Europe have long been hostile. These 500 billion would be added to the approximately 500 billion already decided by the finance ministers of the euro zone and made up of lending capacities in particular. In total, Europe would therefore release around 1,000 billion euros to counter the historic recession looming for 2020 in the euro area (-7.7% according to the latest Commission forecasts).

It now remains for the Franco-German couple to convince all the EU member states. The 27-member negotiation could be delicate, following the traditional lines of the Union between countries of the North and the South. Austrian Chancellor Sebastian Kurz reacted by saying that he was in favor of “loans”, and that he did not want an increase in the EU budget but a redistribution of his resources. He met on this subject with the leaders of Denmark, the Netherlands and Sweden, other countries likely to oppose the Franco-German proposal.

The entourage of Italian Prime Minister Giuseppe Conte and the Spanish government have welcomed “a step in the right direction”, which the two countries were calling for. “The Franco-German proposals are ambitious, targeted and welcome,” said the president of the European Central Bank, Christine Lagarde. The President of the European Commission, Ursula von der Leyen, also “welcomed the constructive proposal from France and Germany”. It must itself present on 27 May its own plan for the economic recovery of the EU.


Tags

Related Articles

Back to top button
Close
Close