EU leaders agreed on a EUR 1.8 trillion package of measures to tackle the exceptional nature of the economic and social situation posed by the coronavirus pandemic.
After four days of marathon talks in Brussels, EU leaders conceded the package worth EUR 750 billion. Accordingly, the bloc will issue debt jointly which would be provided to member nations hit hardest by the Covid-19.
Out of the EUR 750 billion recovery plan, EUR 390 billion will be in the form of grants and EUR 360 billion of low interest rate loans. Now the deal needs to be approved by the parliament of 27 member states.
According to the original plan, EUR 500 billion was allocated for grants and EUR 250 billion in loans.
But the four frugal members, Austria, Denmark, the Netherlands and Sweden opposed providing EUR 500 billion in the form of grants.
Earlier in May, German Chancellor Angela Merkel and French President Emmanuel Macron had drafted an outline of today’s package, which was finally approved with amendments.
French President Emmanuel Macron said on Tuesday that it was a “historic day for Europe.”
Alongside, members also agreed on the regular budget for the next seven years. The budget worth about EUR 1.1 trillion was designed to fund EU’s regular policies.
The European Council said the latest package includes Multiannual Financial Framework, or MFF, and a specific Recovery effort under Next Generation EU, or NGEU.
“It is an ambitious and comprehensive package combining the classical MFF with an extraordinary Recovery effort destined to tackle the effects of an unprecedented crisis in the best interest of the EU,” the European Council said.
“NGEU and MFF go together,” the council added. The NGEU is an exceptional response to those temporary but extreme circumstances.
ING economists said the agreement is a milestone for the EU as it tries to battle the economic impact of the Covid-19 crisis. However, in terms of size, the fund is still relatively small given the severity of the economic crisis.
Also, the fund will only become effective on January 1, with the first money probably reaching the real economy not much before mid-2021, they pointed out.
This was the second longest summit in the EU history after the Nice summit in 2000. The summit that began last Friday was initially planned to end on Saturday. But the failure to reach on a deal forced leaders to extend the meeting.
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