EU virus recovery deal remains elusive

Rescue package is far from being unanimously welcomed

European Union leaders found that a quick deal on the bloc’s future longterm budget and a multibillion-euro post-pandemic recovery plan remained beyond their reach yesterday as the coronavirus ravages their economies.

“It is essential to take a decision as soon as possible,” EU Council President Charles Michel said, announcing he plans to call an in-person summit for the leaders of the 27-nation bloc for mid-July.

The meeting was the first step in intense discussions on the European Commission’s plans for a €1.1-trillion seven-year budget and a €750-billion recovery fund.

Devised to help member states’ economies cushion the impact of the coronavirus, the package is far from being unanimously welcomed and more time will be needed to find a deal.

Long-term budget

European Commission president Ursula von der Leyen has proposed a revised long-term budget for the 2021-2027 period that would represent around 1.1 per cent of European GDP after the UK’s departure, coupled with the temporary reinforcement of the €750 billion set aside to combat the virus.

A blend of debt mutualisation, grants and loans, the aid plan has over failed to gain the approval of a group of countries known as the Frugal Four — the Netherlands, Denmark, Austria and Sweden. They oppose issuing too much common debt to support the hardest-hit countries and argue that the money should mainly be handed out in loans instead of grants.

Another divisive topic relates to how the money will be allocated. The Commission proposed to work it out based on criteria including the size of population, gross domestic product per capita and unemployment. One top European diplomat said that the range is too limited.