The European Commission will offer a € 750 billion stimulus fund to deal with the EU’s economic crisis caused by the coronavirus pandemic, Economic Affairs Commissioner Paolo Gentiloni announced on Wednesday.
The European Commission is proposing a € 750 billion recovery fund to deal with the EU economic crisis caused by the coronavirus pandemic, announced on Wednesday, May 27, 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”, the Italian commissioner commented on his Twitter account.
Italy and Spain, main recipient
According to a European official quoted by Reuters, most 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 EUR 750 billion, EUR 173 billion would be released for Italy (EUR 82 billion in direct aid and EUR 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).
The Commission proposes a Fondo di Recovery da 750 billion che aggiunge agli strumenti comuni già varati. Una starved europea per fronteggiare una crisi senza precedenti. #NextGenerationEu
– Paolo Gentiloni (@PaoloGentiloni) May 27, 2020
Even before the official announcement, this plan, which will be presented by Commission President Ursula von der Leyen, highlighted the still living divides between 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, which proposed on 18 May the creation of a stimulus fund to be allocated EUR 500 billion raised by the Commission, which would provide budget support to the regions and states of the Union most affected by the new krona virus crisis.
These sums would be borrowed on the markets by the Commission at more favorable prices than would have the public finances in difficulties such as Italy or France.
On the other hand, the so-called “frugal” states, such as Austria, the Netherlands, Denmark and Sweden, are reluctant to the idea of simple budget transfers to the Member States the alternative loan (repayable) to the most affected states.
Seeked balance between grant and loan
In recent days, the European Commission has assured that its recovery plan would respect a strict balance between grants and loans without providing more information.
This stimulus will be supported by the EU’s draft budget 2021-2027 – known as the multiannual financial framework – of approximately EUR 1 trillion, which will also be presented on Wednesday by the Executive Agency for ‘Union.
The Commission’s project will be on the agenda for the next European summit on 18 and 19 June.
With AFP and Reuters