EU agrees to £470bn bail-out deal after Italy warns of split
‘This plan will shield our economic and social fabric as we dive into a recession’
THE EU struck a £470billion rescue deal to help countries badly hit by coronavirus last night, after Italy’s prime minister warned that without one, the bloc could collapse.
The agreement on a bail-out fund will help patch up bitter rifts between southern countries like Italy and Spain, which have borne the brunt of the pandemic in Europe, and fiscally conservative nations like Austria, Germany and the Netherlands.
The breakthrough came after Germany put pressure on the Dutch to end their opposition to providing more help to the south.
Mario Centeno, the chairman of the EU finance ministers meeting, said: “This emergency plan will shield our economic and social fabric as we dive into a recession.”
Wopke Hoekstra, the Dutch finance minister, said: “With this package. we will help countries in need in the short term while also building resilient economies in the long term. This is a powerful and sensible sign of European solidarity.”
Roberto Gualtieri, his Italian counterpart added: “We are delivering to leaders an ambitious package of proposals. Italy will fight determinedly so that the decisions of the European Council are up to the challenge that Europe is facing.”
Under the package, countries will be able to access £210 billion worth of credit from the fund with no strings attached to help them cope for as long as the pandemic persists.
However, on Dutch insistence, longer-term loans designed to rebuild national economies after the crisis will come with fiscal conditions.
There was also a deal on £88billion of capital for an Eu-wide scheme to subsidise wages, plus up to £175billion of extra firepower for the European Investment Bank to lend to businesses.
However, there was no agreement on the controversial Spanish and Italian proposal for “corona bonds” – joint debt issued to member states of the EU which would help finance the recovery of the bloc’s economies.
The Italians and Spanish are supported by a number of other countries, including France, Belgium, Ireland,
Greece, Slovenia and Portugal. But the corona bonds proposal is bitterly opposed by Germany, Austria, the Netherlands and Finland. Those countries wanted the use of the European Stability Mechanism, the bloc’s existing bailout fund which loans money to individual member states which they later have to pay back.
As part of the compromise, Mr Centeno will send a letter to all EU leaders outlining how some countries favour pooling debt as part of a future recovery fund for the bloc, but others oppose such a move.
Earlier, Giuseppe Conte, the Italian prime minister, had told the BBC: “If we do not seize the opportunity to put new life into the European project, the risk of failure is real. It’s a big challenge to the existence of Europe. If Europe fails to come up with a monetary and financial policy adequate for the biggest challenge since World War Two, not only Italians but European citizens will be deeply disappointed.”
The message was echoed by Pedro Sánchez, Spain’s prime minister, who told the parliament in Madrid: “We need seamless solidarity in Europe.
“That is what I demand from the EU; it’s now or never.”