The european Union spent the greater rate to boost its economy : the president of the european Commission, and Ursula von der Leyen, unveiled Wednesday a plan to help exceptional, highly anticipated by the States affected by the crisis. It should provide a stimulus funds of 750 billion euros to support the european economy. Italy and Spain account for the lion’s share of this recovery plan, have underlined the eu sources.
The stimulus money is based on a revised draft of the long-term budget of the EU, which is backed by a new stimulus funds that would be financed by borrowing on a large scale of the Commission on behalf of the EU, on an unprecedented scale. The Commission has proposed a fund in the amount of 750 billion euros, according to the european commissioner for the Economy, the Italian Paolo Gentiloni. Of this amount, $ 500 billion would be redistributed in the form of grants, in the amount called for in the project franco-German presented last week. The rest would be redistributed in loans to member States, according to european sources corroborating. If it is accepted, this proposal would be the biggest stimulus package ever launched by the EU.
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A new line of fracture
” We see potentially a radical change in the macroeconomic policy of the european […]. This creates an important precedent, ” commented Wednesday, Philip Lambers, co-chair of the Greens group in the european Parliament, in expectation of the presentation of Ursula von der Leyen. Last week, Germany had been surprised by announcing, with France, a radical change of doctrine : in a joint proposal, Paris and Berlin supported a plan of 500 billion euros, via a mechanism of mutualization of european debt, an option to which Berlin was previously hostile. But to obtain the unanimity of the member States, required on the budget, it will be a difficult exercise.
Already before the pandemic, the 27 had failed in February to agree on a budget in the order of 1 000 billion euros for the period 2021-2027. The economic storm has not closed ranks between Northern countries and Southern countries, the worst hit by the health crisis. The various camps are grouped around a new line of division : those, most rigorously (the netherlands, Austria, Denmark and Sweden), who want to support only through loans, which will need to be refunded, and those who do not want grants.
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Already 2 130 billion of State aid validated
The project of Ursula von der Leyen will be a mix between the two options, and this will not be a copy-and-paste ” of the franco-German proposal advanced last week by Angela Merkel and Emmanuel Macron, has assured a source european. The sum allocated to the stimulus funds as well as the conditions for benefit are to be finalized and is dependent on the borrowing capacity of Brussels. Ursula von der Leyen wants to increase falling revenues that are theoretically available in the budget, the amounts that the EU may legally require member States to 2 % of gross national income (GNI) of the EU against 1.2 % currently, according to a source at the Commission.
On the eve of the presentation, one of the vice-presidents of the Commission, Maros Sefcovic, has called for a political agreement fast, during the next european summit scheduled on June 18. In addition, the new budget will enter into force only in 2021, it will need to find a solution to have funding in the fall to support the economies at risk of recession. The next budget recovery will also meet the political commitments of the Commission that has placed the digital and energy transition at the heart of the growth of the Old Continent. Without forgetting to develop “strategic autonomy” of the EU, so that it is more resistant to crises and less dependent on outside, particularly China.
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The instrument of stimulus, and the budget would be in addition to the 240 billion euros of loans from the european stability Mechanism (ESM bailout fund the euro-zone) to the 200 billion of the guarantee fund for companies and $ 100 billion of the instrument are for SURE created to support the part-time unemployment. The Commission has also validated 2 $ 130 billion of State aid since the beginning of the crisis, including about half released by the German government to support its businesses.
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