At a four-hour video conference on Thursday, leaders from the EU27 confirmed a pre-agreed package of financial support, amounting to €540bn, through existing mechanisms and to be operational from June 1.
However, beyond the immediate aid, dispute remains over the structure - and funding – of the long-term recovery plan and the Commission has now been asked to come up with proposals by May 6, when another video conference will be held, and when the executive will table a proposal for a new long-term budget.
Proposals might include increasing the EU's common budget, issuing grants to stricken economies or selling bonds together to raise funds.
Some Member States such as Italy and Spain, two of the countries worst hit by the health crisis, want the next long-term EU budget, the MMF, due to come into force on 1 January 2021, to be the cornerstone of the recovery programme.
But expanding substantially could prove difficult with northern countries such as Denmark and the Netherlands opposed to paying for poorer southern countries they see as financially irresponsible.
It is thought that €1-1.5 trillion would be needed in the next MMF for the recovery plan. The EU has been split over the next seven-year budget for more than a year.
Italy, France and Spain are among a group of countries proposing the use of grants to fund economic recovery while the Netherlands and Austria are among those who insist that this should happen in the form of loans.
After the conference, reactions from EU leaders were mixed with Italy’s Prime Minister Giuseppe Conte saying “great progress” had been made, while French President Emmanuel Macron said differences continued between EU governments over whether the fund should be transferring grant money, or simply making loans.
German Chancellor Angela Merkel called for a major recovery fund.
"Again, a majority of EU heads of state and government do not take their responsibility and keep kicking the can down the road and this is toxic for the very idea of the European project" Philippe Lamberts, Greens co-leader
Further reaction came from Belgian MEP Philippe Lamberts, leader of the Greens/EFA in Parliament, who said, “People in the EU expect their governments to act and to show that we are all in this together and there is a way to get out of this together.”
“When what people need is a strong message of solidarity, there are heads of state and government shying away from their responsibility, delivering on a minimum level only, with major delay and in the end leaving it up to the Commission to take over.
“Again, a majority of EU heads of state and government do not take their responsibility and keep kicking the can down the road and this is toxic for the very idea of the European project.”
The Belgian deputy said his group supports a “huge increase” of the Multiannual Financial Framework by up to €1.5 trillion to help with the economic fallout from the pandemic that has claimed tens of thousands of lives in Europe alone.
RE deputy leader Luis Garicano, a Spanish MEP, said, “It is excellent news that EU leaders have agreed to set up an ambitious recovery fund. The main discussion is whether aid to states will take the form of loans or transfers. If the EU wants to move forward it must stop being a lender of last resort and become an investor of the future.”
Parliament’s President David Sassoli commented, “We are very much in favour of recovery bonds as a tool to finance this reconstruction effort. We have already made ambitious proposals but leaders will need to be even more ambitious.”
Commission President Ursula von der Leyen said, “We have to design a common, future-proof answer to this to ensure the integrity and cohesion of the single market and its shared prosperity.”
"The main discussion is whether aid to states will take the form of loans or transfers. If the EU wants to move forward it must stop being a lender of last resort and become an investor of the future" Luis Garicano, RE deputy leader
Her Council Counterpart Charles Michel, who was sitting next to von der Leyen during the video call, said, “This pandemic is putting our societies under serious strain. The well-being of each EU Member State depends on the wellbeing of the whole of the EU. We are all in this together.”
EU COVID-19 spokesperson for Greenpeace, Faiza Oulahsen said, “We don’t need an economic recovery - we need full system change to address all levels of crisis, whether caused by a virus, inequality, the climate disaster or biodiversity loss.”
“The money the EU raises now to tackle the Corona crisis must also be an investment in addressing the ongoing climate and biodiversity crises and make European economies more equal, just and resilient. Investments in public and greener forms of transport, ecological farming and renewable energy systems creates sustainable jobs and wellbeing for all generations.”
It is feared the pandemic could cut between 5 percent and up to 15 percent of euro zone economic output. The euro zone’s economic growth for 2020 is forecast to contract 5.4 percent.
More than 100,000 Europeans are known to have died from the virus, according to the European Centre for Disease Prevention and Control.
Several countries such as Germany have already lifted constraints and Belgium will decide on Friday if it will do the same.