EU leaders held a video summit on Friday to discuss the European Commission’s proposal on the next Multiannual Financial Framework and the EU’s plan for economic recovery.
The virtual meeting is the first time EU leaders will have gathered together to discuss the huge fiscal package: a revamped €1.1 trillion long-term budget – the MMF - and a €750 billion recovery fund.
However, as governments in Europe differ widely over the source and type of spending they are not expected to reach agreement on the twin package on Friday.
Ahead of the summit, European Council president Charles Michel described the package as an “important step in targeting support towards those sectors and regions most affected by the Coronavirus pandemic.”
The summit is supposed to serve as a preparation for what is intended to be a physical summit at a later date but on Thursday, Angela Merkel said she wanted agreement on the package before the summer recess.
On Friday, the European Parliament’s president David Sassoli said the assembly will only give its consent to a new EU long-term budget if there is “clarity” on the so-called “own resources” Issue.
His message was reinforced in a letter from the Parliament’s main political group leaders to EU heads of state and government.
It said the Parliament “will not compromise on the future of the European Union. We call on the European Council to do the same and match political statements with sufficient budgetary means (...) We need to leave the future generation of Europeans a resilient EU, sustainably thriving and leaving no-one behind”.
Sassoli, addressing a news conference on Friday, welcomed the Commission’s proposals and said the Parliament “stands ready to work to further improve them in the coming weeks.”
“It is clear for us that there is no going back from the level of ambition expressed in the Commission package. We now have the chance to design a new Europe, one that is more equal, greener, and ready for the future. In order to fulfil these ambitions, we need the adequate means. The whole of Europe is affected by the current crisis. Now is the moment to build a sustainable future.”
"It is essential that the members of Council come to a rapid agreement on an ambitious and well-coordinated European Recovery Plan to overcome the Covid-19 crisis" BusinessEurope president Pierre Gattaz
“We are entering into arrangements that mean there will be debt for future generations so there will be no agreement until there is clarity on own resources and the introduction of new taxes and also the timeframe for this. We won’t be happy with just hearing announcements and there is a lot of unity in parliament over this.”
“Due to the health crisis, there is a risk of a profound and serious social impact and we want the next MMF and the recovery plan to lead to more stable jobs, a regulated labour market and not to raise an army of people working on precarious jobs.”
He added, “We are in the midst of a political struggle over the MMF and recovery plan, with a lot of interest for these funds to be used one way and another. They are trying to impose conditions and the EU must withstand this pressure because, here, we are talking about the future of the EU.”
“I hope this whole process can be started and finalised quickly and I welcome the fact that council has voiced appreciation for the package and is now looking at the budget lines and issue of budget rebates. But I would add that parliament, which has the last word on this; aims to ramp up the level of ambition. It is up to council to now start entering into the details.”
Sassoli went on, “The council must not put forward a proposal that lowers the ambition of what the Commission has outlined. We must defend the European space. We cannot afford speculation or attacks on our strategic assets. This is a delicate moment.”
In a debate on the budget on Wednesday, MEPs said “that time is pressing and it is now in council’s hands to quickly take the next important step: finding a common position among member states.”
Members said the recovery plan “can get things going, but only with an ambitious long-term budget can we cross the finishing line”. Many said the proposal was the bare minimum and Parliament’s role has to be strengthened in devising and implementing the package.
Parliament’s negotiating team for the MMF has said that the €750bn borrowing plan was important but should not be financed at the expense of the MMF, warning of the danger of a weakened EU budget after the “recovery phase.” The package is designed specifically to address the impact of the Coronavirus crisis but the recovery fund relies on borrowed money that must be repaid.
Countries including Austria, the Netherlands, Denmark and Finland – the so called “Frugal Four “- oppose distributing money as grants. The EU is also pressure from some countries to opt for a smaller budget than proposed by the Commission.
"People are waiting for governments to build back a better Europe. That means getting behind the recovery plan; conditioning bailouts to exclude all fossil fuels and corporations who dodge tax or have poor labour practices; and fostering decent jobs and reducing environmental impacts" Friends of the Earth Europe Director Jagoda Munic
Further comment came from Elisabetta Gualmini, The European Parliament’s Socialist Group Spokeswoman on own resources, who said: “The current mix of revenue financing the EU budget, which consists of GNI contributions of approximately 70 percent, has led to a situation in which the European project itself lacks its own operational legitimacy and is mostly dependent on budgetary decisions taken by member states.
“New resources for financing the Recovery Plan for Europe shall be generated by policies and measures that can only be executed at a European level and that no member state could put into action by itself, therefore not resulting in an additional fiscal burden for national treasuries.”
Elsewhere, BusinessEurope president Pierre Gattaz said, “The EU and its member states need to progressively reopen their economies and put in place a coordinated economic response to support business - and SMEs in particular - to recover from the shock of the crisis. It is essential that the members of Council come to a rapid agreement on an ambitious and well-coordinated European Recovery Plan to overcome the Covid-19 crisis.”
Friends of the Earth Europe meanwhile warned that EU governments were “directing trillions in economic stimulus measures to polluting industries such as airlines, cars and fossil fuel facilities, with few conditions attached.”
Its director Jagoda Munic said: “EU help to resuscitate our Covid-ravaged economies and put Europe on a sustainable and just path is urgently needed. Right now, EU leaders are choosing squabbling over solidarity. Failure to act decisively and with vision could return Europe to disaster and put global warming targets beyond reach.
“People are waiting for governments to build back a better Europe. That means getting behind the recovery plan; conditioning bailouts to exclude all fossil fuels and corporations who dodge tax or have poor labour practices; and fostering decent jobs and reducing environmental impacts.”
“This is our best ever opportunity to invest billions in building up the green and equitable solutions we need like community renewable energy, agro-ecology, and decent energy-efficient homes for all.”