EU leaders seek solutions for pandemic-hit economies

They agreed on establishing a Recovery Fund, but disputes over credits or grants remained

Photo: EU Ursula von der Leyen and Charles Michel during the press conference on Thursday evening.

How to deal with the Covid-19 and its consequences, and especially how to help the pandemic-hit economies, discussed on Thursday afternoon at a videoconference the EU27 leaders, together with the presidents of the European Council, the European Commission and in the first part of the session – with the president of the European Parliament. 

The meeting did not produce a joint statement, but the President of the European Council, who chaired the sitting, issued conclusions afterwards.

This pandemic is putting our societies under serious strain and the well-being of each EU member state depends on the well-being of the whole of the EU, said President Charles Michel at a news conference, adding that fighting Corona and its consequences will take time “but we have already made a lot of progress and taken bold action”.

President Michel said as well that at the fourth of this kind in the last two months videoconference the leaders have expressed a strong will to move forward together.

They discussed progress on the various dimensions of the European response to the pandemic and welcomed the Joint European Roadmap towards lifting of Covid-19 containment measures, agreeing that the health and safety of the citizens comes first.

They also welcomed the Joint Roadmap for Recovery that specifically identifies that the EU needs investment efforts such as the Marshall Plan to stimulate economic recovery and modernisation and that “green transition and digital transformation will play a priority role in relaunching and modernising our economy”.

The European Council members endorsed the agreement on three important safety nets for workers, businesses and sovereigns, amounting to a package worth €540bn, adopted by the Eurogroup on 9 April. They also called for this package to be operational by 1 June this year.

The leaders also agreed on establishing a Recovery Fund, but disputes over whether it will help with credits or with grants have once again divided the well-off countries of the North and the countries of the South, most hit by the crisis.

“This fund shall be of a sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected, and be dedicated to dealing with this unprecedented crisis,” President Michel explained.

He said that the Commission is tasked to analyse the exact needs and to urgently come up with a proposal that is "commensurate with the challenge we are facing".

No figures about the Recovery Fund were mentioned to the press, but some experts said it will be about €1.5tr. The Commission proposal should clarify the link of the fund with the MFF, which in any event will need to be adjusted to deal with the current crisis and its aftermath.

We remain committed to giving the necessary impetus to work on the recovery fund as well as the MFF, so that a balanced agreement on both can be found as soon as possible, the European Council President stressed.

I am convinced that there is only one instrument that can deliver this magnitude of tasks behind the recovery and that is the European budget, clearly linked to the Recovery Fund, EC President Ursula von der Leyen underlined.

The next MFF, the next seven-year budget, has to adapt to the new circumstances, post-corona crisis, she said adding that there is a need to  increase its firepower to be able to generate the necessary investment across the whole EU.

She also stated that the Commission will propose to increase the so-called ‘headroom' -  the space between the existing ceiling in the MFF and the own resources ceiling. Thanks to the legal guarantee by Member States, the Commission will be able to raise funds, which will then be channelled through the European budget into the Member States, she outlined.

“Our current estimates of the needs lead us to think that an own resources ceiling of around 2% of GNI for two or three years instead of the current 1.2% will be required. The money raised – as I said – will be channelled back into the MFF through a recovery programme and concentrated into a number of programmes that will help tackle this crisis.”

President von der Leyen also stressed that the investment should be front-loaded in the first years, and that it is necessary to find the right balance between grants and loans.

The EC President said the Commission will move forward on the topic as fast as possible discussing with the Member States. She expects the refashioned MFF proposal and the Recovery Fund to be tabled in the second or third week of May.

The summit with the Western Balkans will be held via videoconference on 6 May. 

 

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