MEPs declare ‘this is the moment’ to agree EU long-term budget and recovery fund

It is hoped that Friday’s crunch summit will resolve the current impasse over the budget and €750bn recovery package designed to help EU economies address the impact of the pandemic.
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By Martin Banks

16 Jul 2020

On the eve of the summit, European Council President Charles Michel said in a statement addressed to EU leaders, “We have worked intensively with all of you and taken due note of your concerns.”

“On that basis I have put forward a proposal to address the key difficulties and to build bridges between the different positions. Finding agreement will require hard work and political will on the part of all.”

“Now is the time. A deal is essential. We will need to find workable solutions and come to an agreement, for the greater benefit of our citizens.”

Four Member States - the Netherlands, Austria, Sweden and Denmark - have made plain their opposition to the deal tabled by the Commission. The summit is tasked with breaking the current deadlock before the summer recess.

“This is the moment. European leaders must leave nationalisms in order to build a European answer. The Multiannual Financial Framework and the Recovery instrument are so far the appropriate tools” Margarida Marques MEP

Just ahead of the summit, the first at which EU leaders will physically be present at such a gathering since the start of the Coronavirus outbreak, this website canvassed opinion from MEPs on what they hope and expect the meeting will produce.

Portuguese Socialist deputy Margarida Marques said, “European citizens are waiting for the summit to deliver. We hope that, at last, European leaders will reach an agreement on the European response to the crisis.”

“This is the moment. European leaders must leave nationalisms in order to build a European answer. The Multiannual Financial Framework and the Recovery instrument are so far the appropriate tools. But an immediate answer, based on the Recovery instrument, can't undermine the EU long-term budget.”

Marques added, “The MFF is key for the EU programmes and investment and Europe’s future ambition. It cannot be put at risk. The European Parliament has been ready to negotiate for a long time. European funding to citizens, companies, NGO's, local and regional authorities, countries must be available as soon as possible.”

“We need a deal as soon as possible. COVID-19 has shaken our economies and societies to their core” Christophe Hansen MEP

Further comment came from Luxembourg EPP member Christophe Hansen, who also told this website, “We need a deal as soon as possible. COVID-19 has shaken our economies and societies to their core. The fact that the MFF discussion is now inextricably intertwined with a robust recovery fund gives us a once-in-a-lifetime opportunity to think ahead strategically which direction we want to take, backed by unprecedented financial firepower.”

“With Angela Merkel in her second Council presidency and at the pinnacle of her political capital, defining her European legacy, I believe this unique window of opportunity can be seized to get the EU back up on its feet with a sustainable recovery path that lays the groundwork for future prosperity and competitiveness.”

He added, “The rule of law cannot be an afterthought or a bargaining chip in these negotiations. It must be front and centre. Never before has the state of the rule of law in so many Member States been in such bad shape; never before has so much taxpayer’s money been at stake.”

Further comment came from Italian member Elisabetta Gualmini, S&D rapporteur for Parliament's ‘Own Resources’ dossier, who said, “EU leaders have to do better: we have to remember that long-term EU policies cannot be sacrificed because of short-term recovery.”

“EU fundamental programmes, such as Erasmus+, Horizon Europe, Digital Europe and the support of external policies in the field of migration (NDICI) cannot be further cut. This is not acceptable for the European Parliament.”

“Secondly, if on one side we strongly favour Charles Michel's intention to introduce in the package a binding ‘rule of law mechanism’ for the allocation of EU funds, on the other side, we have many concerns on the modification of the governance for the approval of the national plan of recovery, in the framework of the EU semester.”

“Thirdly, we believe a further step shall be done on the revenue side of the EU budget, which is needed to finance EU recovery. We regret the decision to maintain the outdated and non-transparent mechanism of rebates, which among the other things favours the richest countries, plus we need a clearer binding calendar for the introduction of new own resources, with a basket of new ones as of 1 January 2021.”

“We cannot wait until 2028. This remains one of the European Parliament’s conditions for its consent on the next MFF. We absolutely need new ambitious financial resources to overcome this terrific crisis and meet our citizens demands. The EU needs a long-term vision, I hope at the next EUCO, national governments will find an agreement, taking into account the voice of the European Parliament.”

“EU leaders have to do better: we have to remember that long-term EU policies cannot be sacrificed because of short-term recovery” Elisabetta Gualmini

Another MEP, French Socialist Pierre Larrouturou, Parliament's general rapporteur for the 2021 EU budget, also spoke to this website, asking, “How do we prevent millions of workers from falling into unemployment? How do we prevent our democracies from falling into chaos? How can we avoid a deep, social and political crisis that makes us forget, once again, about the climate emergency?”

“Some 59 million jobs are at risk in Europe. We are facing the risk of a recession worse than the 1929 Great Depression. When FD Roosevelt came to power in the midst of the Great Recession, he used the federal budget to create millions of jobs and save democracy. But he insisted on having a balanced budget, and that debt was only a short-term solution for recovery.”

“In 2020 as well, in the short run, debt is the solution for a Recovery Plan, which is up to the magnitude of this crisis, and we salute the proposal by Angela Merkel and Emmanuel Macron for a €500bn recovery plan. But some countries do not agree with this plan because they do not want to have to repay this common debt.”

“A joint debt of €500bn to be repaid by the EU over 30 years, as proposed by the European Commission, would require repayment of around €20bn per year [in interest and capital].”

The deputy asked, “Where can this amount of money come from? How to unlock the negotiation?”

Larrouturou added, “Countries who would refuse common debt may be keener to accept it if they know how this debt will be repaid, and that they will not be asked to repay it, thanks to new common own resources. On 26 April, Angela Merkel stated that the Financial Transaction Tax is one of the priorities of the German presidency of the EU. She is right.”

“In all our countries, we pay at least 15.5 percent of VAT. For basic necessities, even the most vulnerable must pay 5.5 percent VAT. But buying stocks on financial markets is taxed at a 0,0 percent rate. How can we explain to citizens this 0.0 percent rate? Are stocks and bonds even more essential to life than water or food?”

“How do we prevent millions of workers from falling into unemployment? How do we prevent our democracies from falling into chaos? How can we avoid a deep, social and political crisis that makes us forget, once again, about the climate emergency?” Pierre Larrouturou MEP

“In September 2011, the European Commission proposed a directive to create a small tax of 0.1 percent on financial transactions. Could such a Financial Transaction Tax (FTT) really raise revenues in the context of this current crisis? Yes. During the Spring of 2020 the European economy was in a deadlock. But the volumes traded on financial markets in March-April 2020 were 45 percent higher than in 2010.”

“Therefore, despite Brexit and despite the crisis, a small tax based on the 2011 directive proposal could raise more than €50bn per year: ten times more than the digital tax or the plastic tax.”

Larrouturou added, “In 2020, positions are shifting. Countries which were not supporting the FTT until now are changing their minds. In February 2020, the Polish Prime Minister wrote a column in the Financial Times in which he called for 3 new resources, including the FTT.

“The German Development Minister said he supports an ambitious financial transaction tax that can raise €60bn a year. He commissioned a study in March 2020, which shows how an ambitious FTT can be introduced.”

“In Austria, the Finance Minister refuses an FTT that would only collect €4bn because it would not cover high frequency trading and derivatives. Austria is one of the countries that is blocking the €500bn of common debt. To repay the debt and unblock the negotiations, wouldn’t the best solution be to have an ambitious FTT?”

“Jeppe Kofod, now Danish Foreign Affairs Minister, was advocating an FTT when he was an MEP. A solid financial transaction tax could raise €50bn every year: €20bn to repay the recovery plan and €30bn for new projects (Green Deal and digital). Some 64% of EU citizens and 82% of German citizens support the FTT.”

Larrouturou concluded, “With the own resources proposed by the European Parliament, we can fund a real European climate and jobs pact, creating millions of jobs.”

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