EU proposes €750 billion recovery fund – a mix of grants and loans

The tortuous process of getting Brussels to actually release money for post-Covid recovery entered yet another ‘phase’ today, with the EU executive announcing a €750 billion ‘bazooka’ made up of €500 billion in grants, and the rest in loans.

Billed by commissioner Paolo Gentiloni as a “European turning point to face an unprecedented crisis”, Associated Press (AP) concedes it is really just another proposal “likely to set off weeks of wrangling”.

Encouraging soundbites have been coming through for days (click here). The reality is however that four of the wealthiest countries in the bloc are not up for this kind of solution, nor the one put forward recently by President Macron and Angela Merkel. They see both proposals too heavily-based on richer countries supporting the weaker less disciplined ones.

Says AP, the 27-nation EU is thus deeply divided at a moment when “virtually every country has broken the EU’s deficit limit” due to pandemic spending to keep health care systems, businesses and jobs alive.

And the thing about the wrangling is that the EU does not have time for it.

Says AP, “the new budget period begins on January 1 and countries across the bloc are desperate for funds now”.

For the recovery fund to take effect – in whatever form it finally takes – all 27 member countries “must agree” to all the qualifying terms and conditions. Right now that’s looking as fraught as herding cattle through the eye of a needle.

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