EU Finalizes Stimulus Plan Of Over Two Trillion Dollars
Early Tuesday morning a plan came together that would facilitate the EU, for the first time ever, to issue hundreds of billions of euros of common debt. German Chancellor Angela Merkel and French President Emmanuel Macron were forced to compromise, the 27 countries leaders ultimately agreed on a €750 billion recovery plan. Of that, €390 billion will be offered in grants and the rest will come in the form of loans. (Reduced from the €500 billion proposed by Brussels.) A multiyear EU budget of over €1 trillion, starting next year and running to 2027, was also agreed upon. The EU previously agreed to a €540 billion coronavirus emergency package of loans to governments and businesses.
“We did it. Europe is strong. Europe is united,” European Council President Charles Michel. “These were of course difficult negotiations in very difficult times for all Europeans. This is a good deal. This is a strong deal.”
The EU deal will need to be approved by the parliaments of member states, which could prove contentious. The European Commission, the EU’s executive branch, will be responsible for issuing the debt to fund grants and loans for the member countries. The plan should boost Europe’s economic recovery, and now opens the door for Italy, Spain, Greece and others to increase government spending. This was crucial for Italy who's national debt risks ballooning to a level that could endanger the euro.
“I think it’s a very important message to the rest of Europe—but also beyond Europe, that this very special entity, this very special construct of 27 member states of the European Union...is actually able to act together and has proven that it is able to act together,” said Ms. Merkel in a press conference alongside Mr. Macron. Although previous discussion took place and became quite contentious, Dutch Prime Minister Mark Rutte said the recovery plan wouldn’t convert the EU into a wealth-transfer union because the Netherlands and its allies had ensured it was a time-limited, one-off program launched for the health crisis. Meanwhile Italian Prime Minister Giuseppe Conte, who clashed with Mr. Rutte over the size of the grants and the conditions to be attached to loans, said the accord, despite the reduced amount of grants, was a major step forward.
“We are satisfied we have launched an ambitious recovery plan,” he told reporters. “It’s a historic moment for Europe. It’s a historic moment for Italy.”
The negotiations began on Friday and by after dinner sweets on Saturday France, Germany and the Dutch-led group were in heated discussions and negotiations. However, by dawn Monday, an agreement was reached on the amount of grants that should be given under the plan, the rest of the package soon fell into place. Hungarian Prime Minister Viktor Orban opposed plans to link some EU budget spending to a member country’s upholding of democratic principles. Despite EU efforts to gradually kill off the special budget repayments enjoyed by a few countries, the final package saw the Netherlands, Sweden, Denmark and Austria get larger rebates.