European Council on recovery fund ends in disagreement
Saturday, 20 June 2020
European Council President Charles Michel at the virtual conference on 19 June
The main topic at the virtual videoconference of EU leaders on Friday was the European Commission’s proposal for the recovery of the EU economy following the corona crisis.
Four member states opposed the construction of the recovery fund.
“It was the first occasion to discuss at the level of the leaders the proposals put on the table by the Commission, the multi-annual financial framework and the Recovery Fund,” said European Council President Charles Michel.
“It was the occasion to observe that on different points there is an emerging consensus, which is very positive. But at the same time, we don’t underestimate the difficulties.” Still, he felt that there is a political will among the member states to reach an agreement. In next phase, a physical summit already in mid-July, he expects real negotiations on concrete proposals.
The proposal, called Next Generation EU, is a temporary reinforcement of EU’s long-term budget for 2021 – 2027. The first pillar of the proposal is intended for support to member states for investments and reforms and is dominated by a new recovery and resilience facility of €560 billion which will be allocated to member states in the form loans and grants.
According to the Swedish Prime Minister Stefan Löfven, Sweden agree with Denmark, the Netherlands and Austria (the “Frugal Four”) that the recovery fund should be exclusively based on loans without any grant component. Otherwise, he claimed, the EU budget would expand by almost 50 %.
European Commission President Ursula von der Leyen did also find the first discussion on the Commission’s proposal “very positive” despite the differences of opinion.
“I was also glad to hear that many leaders stressed that we must do everything in our power to reach an agreement soon in the European Council before the summer break,” she said. “There is a real understanding that the effectiveness of the response depends on this, too.”
“Of course, the discussions also showed differences of opinion on various issues, for example on the overall size of Next Generation EU, on the balance between grants and loans, on the allocation key, and on own new resources and rebates.”
As regards the allocation of the financial support to the member states, the Commission has proposed the use of employment data dating to before the corona crisis, as they affected the resilience of the countries to the crisis, while others think that the allocation should be strictly related to the corona pandemic.