Earlier this week, France and Germany jointly proposed a 500 billion euro Recovery Fund to address the impact of the COVID pandemic. The fund will be used to provide grant to European Union state members and sectors that have been hit hardest by the coronavirus outbreak, which would support the euro.
The EU’s two biggest countries propose that the European
Commission (EC) borrow the money on behalf of the EU and spend it on top of the
2021-2027 EU budget that is already near $1 trillion euro over the seven year
period. French President Emmanuel Macron commented:
“That's a real change
in philosophy. I believe this is a very deep transformation and that's what the
European Union and the single market needed to remain coherent. It's what the
euro zone needs to remain united.”
The proposal is likely to be welcomed by countries like
Spain and Italy, which have encourage a joint approach to address the crisis.
However, offering grants instead of loans might be difficult to accept for
frugal countries like Austria, the Netherlands or Finland.
Austrian Chancellor Sebastian Kurz tweeted:
“Our position remains
unchanged. We are ready to help most affected countries with loans. We expect
the updated (EU budget) to reflect the new priorities rather than raising the
ceiling.”
Elsewhere, German Chancellor Angela Merkel said that the 500
billion euro will be paid back over a long period and that Germany would contribute
almost a third of the funds. She said:
“We must act in a
European way so that we get out of the crisis well and strengthened.”