Macron, Merkel to present joint EU recovery initiative

French President Emmanuel Macron and German Chancellor Angela Merkel will present a joint plan to spur European Union recovery from the coronavirus crisis, after weeks of debate over how to deploy billions of euros needed to quickly end painful recession.

Europe is just beginning to emerge from the lockdowns to halt the outbreak, which has taken a huge bite out of national economies and raised the prospects of damaging recessions that could last for months.

But despite widespread recognition that the hardest-hit countries will be unable to repair the economic damage on their own, divisions among EU members on how to craft an overall response have hampered comprehensive action so far.

The bloc has pledged to muster €500bil (RM2.3 trillion) in emergency funding, and the European Commission is hoping to propose a budget that could be used to unleash stimulus worth one trillion euros (RM4.7 trillion).

Macron and Merkel aim to define

“a French-German initiative to respond to the Covid-19 crisis at the European level in the areas of health, the economic recovery, the environmental and digital transition, and industrial sovereignty,” the French presidency said yesterday.

Macron and Merkel both insisted on the need “now more essential than ever” for a European commitment on the coronavirus recovery, during talks on May 8 to mark V-E Day.

The recovery debate has again exposed the bloc’s divide between northern countries leery of exploding budget deficits, and hard-hit southern countries like Italy and Spain that are desperate for more spending.

The eurozone economy overall is forecast to contract a whopping 7.7% this year but the damage could be worse in Italy and Greece, which could see their economies shrink by nearly 10%, prompting a cascade of bankruptcies and job losses.

European sources said last week that the Commission would lay out its plan toward the end of this month, hoping to reconcile the opposing objectives of providing financial firepower – and proving European solidarity – without giving governments a blank check that would expose the entire bloc to gaping budget deficits.

Commission president Ursula Von der Leyen has not given a specific figure, but has said that the plan would be linked to the EU’s regular budget and funded in part by the commission borrowing on financial markets.