Japan approves funds for $1.1tn stimulus; EU unveils $824bn plan
TOKYO/BRUSSELS: Japan’s Cabinet approved a proposed 32 trillionyen ($296 billion) supplementary budget on Wednesday to help fund $1.1 trillion in measures to cushion the blow to the economy from the coronavirus pandemic.
At the same time, the European Union’s executive body unveiled a 750-billion-euro ($824 billion) plan on Wednesday to prop up member state economies hammered by coronavirus, hoping to end months of squabbling over how to fund a recovery that exposed faultlines across the 27-nation bloc.
In Japan, the extra funding under consideration includes support for small businesses, funding for improved medical systems and subsidies for local governments. The budget also will pay for measures to help prepare for possible future waves of infections.
Japan’s economy, the world’s third largest, slipped into recession in the last quarter and was already slowing before the pandemic hit thanks to weakening global demand and consumer spending.
The combined stimulus enacted so far amounts to a total of more than 230 trillion yen ($2.1 trillion), or about 40% of Japan’s economy, Prime Minister Shinzo Abe said at a meeting of officials on Wednesday. “I will defend the Japanese economy at any cost against this once-in-a-century crisis,” Abe said.
In Brussel’s the EU blueprint received an initial positive reaction from Paris, Berlin, Rome and Madrid, as well as the European Parliament, and the chairman of EU leaders said they should aim to finalise an agreement before the summer break.
Under the proposal, which could still be blocked by more frugal northern nations, the European Commission would borrow the funds from the market and then disburse two-thirds in grants and the rest in loans to cushion the unprecedented slump expected this year due to lockdowns. Much of the money would go to Italy and Spain, the EU nations worst affected by the pandemic.
“We either all go it alone, leaving countries, regions and people behind and accepting a union of haves and have-nots, or we walk that road together,” said Commission head, Ursula von der Leyen.
The plan aims to fulfil the commission’s pledge to slash EU carbon emissions to “net zero” in 2050, beef up EU health and defence capability, and prop up firms facing solvency problems.