Recovery fund proposed for helping Europe tackle the coronavirus crisis

Thursday 28 May 2020 11:46 CET | News

EU’s executive Commission has proposed a recovery fund with EUR 750 billion to help EU tackle the pandemic crisis.

According to BBC, the package will be made up of grants and loans for every EU member state. The EUR 750 billion fund would be made up of EUR 500 billion in grants and EUR 250 billion in loans. It would be raised by lifting the EU's resources ceiling to 2% of EU gross national income and would be reliant on the EU's strong credit rating. Therefore, the Commission has dubbed the plan Next Generation EU, which without the backing of all 27 EU member states cannot go ahead.

Germany and France have backed plans for the money to be raised on the capital markets. Spain and Italy have seen the highest number of deaths in the EU during the coronavirus crisis and, in the wake of the financial crisis, are particularly keen on grants rather than loans being added to their public debt.

Several other states object to taking on debt for other countries. Austria, the Netherlands, Denmark, and Sweden reject the idea of cash handouts to relatively poorer countries.

When added to a proposed EUR 1.1 trillion budget for 2021-27, the EUR 750 billion recovery fund would bring to EUR 1.85 trillion the amount, and when added to an earlier EUR 540 billion initial rescue package, that would amount to a total of EUR 2.4 trillion. The money raised on the capital markets would be paid back over 30 years between 2028 and 2058.

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Keywords: coronavirus, COVID-19, Europe, loans, credit, Next Generation EU, Germany, France, Spain, Italy, Austria, Netherlands, Denmark, Sweden
Categories: Banking & Fintech
Countries: Europe
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