Commission President says Coronavirus recovery plan meets many of Frugal Four’s demands

The Netherlands, Austria, Denmark and Sweden have rejected the notion of grants and, instead, have recommended the creation of an “emergency fund” financed by loans only.
European Commission President Ursula von der Leyen arrives in Parliament to present Recover Plan | Photo credit: European Parliament Audiovisual

By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

28 May 2020

European Commission President Ursula von der Leyen has insisted that the executive’s “massive” post-Coronavirus recovery plan meets many of the demands of the so-called “Frugal Four.”

Dubbed “Next generation EU”, the Commission’s proposed recovery fund is worth €750bn. Some €500bn of this will distributed in grants and €250bn in loans to be passed to the 27 Member States.

The €750bn will come on top of the proposed €1.7 trillion provisionally allocated for the MMF, the EU’s next long-term budget.


Speaking at an online news conference on Wednesday, von der Leyen sought to address the concerns of the four states by saying, “As far as I know the four have asked for a modern EU budget. Well, under this programme, 60 percent of investment will go on new, modern policies over the next seven years.”

“The four have asked for front loading and this budget is front loading. They have asked for an emphasis on research and innovation along with enhanced resilience in health and each of these are also fulfilled in our proposals.”

“Of course, there will now be debates on our proposal. I have been in touch with the frugal four. I have put a lot of time and effort into this but I will be happy to explain this to them again. I will listen to them.”

Von der Leyen added, “It is clear what their reserves are but others, not just the four, have reservations too. That is normal and this is the beauty of the EU. Let me be clear though: this is a one off [recovery fund] and an exception. But we must remember we are still in a crisis. We are not out of it and we all share by contributing to EU programmes.”

She said the EU had to “raise our game to a completely new level” and raise “unprecedented amount of funding at EU levels.” This is needed to help keep the outbreak under control, she noted and “help Member States recover from the crisis.”

“One lesson from this crisis is that we need to strengthen and improve the quality of our healthcare systems. This programme will help with this.”

The funding will be raised through loans, many with long-term maturities, and paid back via “own resources” in the next EU budget, including a digital tax. “This will allow Member States to contribute to the next budget at the same levels as now," added von der Leyen.

She said the proposal for a recovery fund “stems from intense work” by the Commission, adding “we now need to reach agreement with the Council as soon as possible, even before the end of this year.”

She added, “I will work without rest to reach an agreement on these proposals and I am confident there is a growing awareness to invest together in the EU common good. As they say, where there a will, there is a way.”

Further reaction to  the plan came from the leader of the Socialists and Democrats, Iratxe García Pérez, who  said, “This proposal is good because it includes the necessary new instruments to face the post-COVID-19 crisis to re-activate our economy and be better prepared for any future crisis.”

“However, it remains to be decided how to use these instruments and how to maximise their leverage. So we will be demanding in our negotiations with Council.”

ECR co-leader Raffaele Fitto said, “It pains us greatly that all reconstruction measures are subject to the primacy of the Green Deal. What if they go wrong and on the one hand promote something that has no hold in the market and on the other hand neglect traditional industries?”

“A recovery test should verify that any legislative or political initiative does not hinder Europe's economic recovery by imposing unnecessary burdens on anyone.”

But German ID member Jorg Meuthen rejected the package proposal as “completely wrong and nonsense”, without a proper legal basis and lacking responsibility or economic sense.

“The Commission wants to spend money as if there was no tomorrow. It is a huge price for European taxpayers,” he said.

Further comment came from Belgian ECR member Johan van Overtveldt who said, “If we are going to allow loans and grants, there must be clear conditions. The money needs to go to where it is most needed, and there must be safety mechanisms in place for our businesses. People working and saving should not have to fork out for these programmes.”

"As far as I know the four have asked for a modern EU budget. Well, under this programme, 60 percent of investment will go on new, modern policies over the next seven years" Ursula von der Leyen, Commission President

French GUE member Manon Aubry commented, “Instead of making a clean break with past dogmas, the Recovery Plan stops midstream.”

Welcoming the new proposals on Own Resources, she called for the crisis debt to be cancelled, for direct perpetual loans to Member States, and for public support to be conditional on social considerations.

Meanwhile, the six members of Parliament’s MFF and Own Resources negotiating team issued a statement on Wednesday that reads, “It is high time to start negotiations on the MFF with Council without delay. We will carefully assess the package of proposals presented by the Commission. We positively acknowledge the reinforcement of the current MFF in 2020 and the significant borrowing which are much needed.” The group meets next Tuesday to discuss the plans in detail.

Council president Charles Michel, now tasked with trying to win over countries such as the “Frugal Four”, said, “I urge all Member States to examine the Commission's proposal swiftly and work constructively towards a compromise in the best interests of the Union.”

Reaction to the recovery plan and MMF also came from the NGO world, with Emily Wigens, EU Director at The ONE Campaign, saying, “The revamped ambitious proposal shows that the Commission is ready to lead the way out of this pandemic within the EU and abroad.”

“We need global cooperation and action to fight this pandemic and its repercussions – especially for the people, communities, and countries that are least able to withstand the shock. The increase in funds for the EU’s external action shows that the Commission understands that international cooperation and development will be key in a post-Corona world.”

She added, “In a world lacking global leadership, this is a strong pitch from von der Leyen for the EU to take up this role.”

Greenpeace EU director Jorgo Riss expressed his disappointment, saying, “The Commission claims its plan protects us and invests in the future, but really it leaves our children and grandchildren to face the consequences of climate and environmental breakdown.”

“For every sensible measure there is another that keeps us dependent on fossil fuels, encourages the destruction of nature, and prolongs job insecurity. Failing to cut off industries that pollute the environment and exploit people will lead us right back to disaster.”

“On balance, the evidence suggests that this plan does not go far enough to free us from pollution as usual. There will be no long-lasting recovery without support for a fairer, greener and healthier world that isn’t wrecked by the blind pursuit of GDP growth.”

Oliver Roethig, Regional Secretary of UNI Europa, said, “We must press reset, not rewind. As working people begin to return to work, safeguarding their health and safety will be key. There is no better way of ensuring that guidelines and best practice are implemented across workplaces, where it really matters, than by giving working people a say.”

"I urge all Member States to examine the Commission's proposal swiftly and work constructively towards a compromise in the best interests of the Union" Charles Michel, Council President

Jagoda Munic, director of Friends of the Earth Europe said, “People are reeling from the shock of this pandemic, so it’s right for the EU to act in solidarity injecting billions to resuscitate our economies while emphasising a ‘green recovery’.”

“But it’s ludicrous not to put any conditions on these funds. Our common future will be shaped by how this money is spent, and allowing strings-free handouts to polluting industries, or corporations who dodge tax or have poor labour practices, will not rebuild the sustainable, fair, caring world we need.”

Thilo Brodtmann, managing director of the VDMA, which represents around 3,300 German and European companies in the mechanical engineering industry, said, “It is good that a European financial solution for the economic restart has been laid on the table. The economy must now be given an efficient and above all sustainable boost.”

“This can only be done with a common European and solidarity-based approach. It is clear that the support must be attached to certain conditions.”

Read the most recent articles written by Martin Banks - New EU regulations on AI seek to ban mass and indiscriminate surveillance