European Commission unveils €750bn Coronavirus recovery fund

Dubbed “Next generation EU” the recovery fund is worth €750bn and is designed to help Europe’s economies and societies recover from the Coronavirus pandemic.
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By Martin Banks

28 May 2020

Of the €750bn fund, €500bn will distributed in grants and €250bn in loans to be passed to the 27 Member States. This is in addition to the proposed €1.7 trillion provisionally allocated for the MMF, the EU’s next long-term budget.

The EU has already approved three “safety nets” worth €540bn as part of its fiscal response to the health crisis.

The Commission now needs to persuade all EU Member States and the Council to support the proposals, which were outlined by Commission President Ursula von der Leyen in a debate with MEPs in Parliament on Wednesday.


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Dubbed the “frugal four”, a total of four countries - Austria, Denmark, the Netherlands and Sweden - have already signalled that they are opposed to the Commission's post-Coronavirus recovery plan.

In a short speech von der Leyen said the €750bn package - keenly championed by German chancellor Angela Merkel and French president Emmanuel Macron - will be raised by borrowing money on the financial markets.

This, she said, was “an urgent and necessary response for an urgent crisis.”

“Let me be clear: these grants are a common investment in our future. The EU budget has always been made up of grants, so this is nothing new” Ursula von der Leyen, Commission President

With many EU countries plunged into recession by the health outbreak, she said, “Let me be clear: these grants are a common investment in our future. The EU budget has always been made up of grants, so this is nothing new.”

Von der Leyen said the fund aims to “repair our social fabric”, protect the single market and “rebalance” company balance sheets across Europe.

Seizing on the name of the fund, she told MEPs that Europe's “next generation will reap the benefits.”

She said the fund represents the EU's “massive financial power” which will be invested in EU programmes and aims to “spark a recovery.”

It will, she told the meeting, also “strengthen the European Green Deal and allow investment in new infrastructure such as 5G. This will also make us more resilient for future crisis and shows the tangible value of being part of the EU.”

To applause from some members, she said, “We have to be ambitious and I count on Parliament’s full support for this because the cost of not investing in this crisis will come back manifold in the future.”

Von der Leyen, who appeared in the chamber with her entire team of commissioners, said the EU “faces our defining moment.”

She said, “This is Europe’s moment. Either we go it alone and leave some behind or we walk the road together and pave a strong path. For me the choice is simple: to take a bold step forward together.”

She was applauded when she told members the Parliament “will have its full say on these decisions.”

“It is crucial the new plan gives hope and perspectives to future generations, to help them build a better tomorrow. We don’t need new money to pay for old deficits; we need it to build a better future for our children” Manfred Weber MEP

The fund is designed to help ensure that countries such as debt-hit Italy and Spain, among those worst hit by the crisis, can restart their economies. The idea is to borrow on the market against the security of the EU budget and give some of the borrowed money to those who are most in need.

Responding, EPP leader Manfred Weber “warmly welcomed” the budget and recovery proposals adding, “we need massive investments in our economies to prevent another lost generation, like we saw during the financial crisis.”

“This is why it is crucial the new plan gives hope and perspectives to future generations, to help them build a better tomorrow. We don’t need new money to pay for old deficits; we need it to build a better future for our children.”

He added, “Our position and influence outside of Europe depends on our unity and our decisiveness in this crisis. We urge Member States to be ready for compromise and to measure the urgency of the situation.”

Spanish MEP Iratxe García Pérez, the Socialist leader, said, “This is an ambitious and pro-European plan that goes along the lines of what we have suggested. Many, though not all, Member States understand what is at stake: the future and credibility of the EU.”
 
“The frugal four are being short sighted in their opposition to the plan - they are holding the other 23 members of the EU to hostage.”

“This is an ambitious and pro-European plan that goes along the lines of what we have suggested. Many, though not all, Member States understand what is at stake: the future and credibility of the EU” Iratxe García Pérez, S&D Group leader

Renew Europe leader Dacian Cioloș told the meeting the crisis was a “gamechanger” adding, “so that is why we must invest massively or we will be hit even harder. This is a package for all Member States and all of them need it, irrespective of how they have been impacted by the crisis.”

“Borrowing money in this way is a remarkable idea but I welcome it. It is a European solution to a European problem.”

He warned, however, “The EU though is not a cash machine so we will only support this package if rule of law and democracy are made a condition to receiving EU funds.”

This was a reference to countries like Hungary and Poland, both of which are at loggerheads with the EU over a perceived threat to the rule of law.

German deputy Ska Keller, the joint Greens leader, also welcomed the “strong recovery fund and MMF.”

“The fund is a big step forward and ensures that no one will be left behind. It is now our common job to convince governments to agree to it.”

Parliament’s President David Sassoli, addressing the “frugal four” said, “I appeal to their sense of responsibility. There are not frugal countries and free-spending countries. Rather, there are countries aware of the seriousness of the challenges we face and those that are not.”

He added, “That is why I ask everyone to live up to this historic moment. Everyone benefits from the EU single market, and the countries which have raised objections are some of those that have benefited the most. I hope that everyone appreciates this.”

“The EU is not a cash machine so we will only support this package if rule of law and democracy are made a condition to receiving EU funds” Dacian Cioloș, Renew Europe leader

“Now is not the time for rigid thinking but for reconstruction, otherwise we will end up with a Europe moving at different speeds.”

The Italian MEP had to repeatedly remind members to “respect” social distancing rules in the chamber, telling deputies, some of whom sat in the wrong seats, “This is compulsory and ushers will tell you if something is not being done properly.”

A representative of the Croatian presidency said, “The recovery fund will deal with an unprecedented crisis, but time is running out and we need to move ahead as soon as possible. We owe this to students, businesses and local authorities. Now more than ever, they need our support.”

Elsewhere, Friends of the Earth Europe said the fund is “necessary and welcome but falls short of a truly green and just recovery needed.”

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. Its emphasis on a ‘green recovery’ is welcome – returning to business-as-usual will only lock-in planetary breakdown.”

“Unfortunately, the Commission’s ‘green’ recovery package today has a distinctly brown tinge. Too many of the measures fall short of the goals of the European Green Deal and put techno-fixes and corporate interests ahead of the resilient and caring economy we need.”

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