Economy

Coronavirus: France and Germany propose €500bn recovery fund

Coronavirus: France and Germany propose €500bn recovery fund”

In talks on Monday, French President Emmanuel Macron and German Chancellor Angela Merkel agreed that the funds should be provided as grants.

Germany, too, has long resisted the idea of joint borrowing, but Merkel said that "because of the unusual nature of the crisis we are choosing an unusual path".

The Commission has welcomed the proposal with President Ursula von der Leyen saying that it "acknowledges the scope and the size of the economic challenge that Europe faces, and rightly puts the emphasis on the need to work on a solution with the European budget at its core".

"No country can solve this crisis alone, we must act together", said Merkel during her video message at the World Health Organization's (WHO) meeting.

He had wanted a huge fund of a trillion or more euros.

National parliaments will have their say on the proposal, which is also likely to run into strong resistance from fiscal hawks in the bloc.

Germany, Austria, and the Netherlands opposed debt mutualisation for the bloc, although Germany has said it is ready to commit to much more aid for European Union countries.

Dutch Finance Ministry spokesman Jaap Oosterveer said the ministry was studying the plan and had no immediate comment.

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He noted that France and Germany want to ensure joint strategic stocks of pharmaceuticals, but also medical products, increasing the EU's R&D capacity in vaccines and treatments.

But Conte added in his Facebook post Monday evening: "To overcome the crisis and to help businesses and families, the #RecoveryFund needs to be broadened".

Macron said that under the proposal, the 27 European Union countries would use their collective weight to borrow money on financial markets.

Other EU countries must agree with the proposal, however, and Austrian Chancellor Sebastian Kurz later insisted that his country backed providing loans to member nations hit hard by the coronavirus pandemic, rather than grants.

This Recovery Fund will target the ravages of the pandemic and its repercussions and "will strengthen the resilience, convergence and competitiveness of the European economies and increase investment, particularly in the ecological and digital transition and in research and innovation", stated the text of the agreement.

She openly agreed with the French that any money from this fund, allocated to a needy European Union country, should be a grant, not a loan.

Corbet reported from Paris.



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