A recovery fund is underway to help launch the European economy after the corona crisis. This requires, among other things, the EU’s multi-year budget (MFF) to rise considerably, says the European Commission. A doubling of the EU budget is envisaged.
Nothing has been decided yet about the fund, but the European Commission is working on a strategy for the recovery phase. This will be linked to the multi-annual budget of the European Union, from which the fund should be partly filled.
The EU budget is expected to double in the next two to three years to fill the fund ‘sufficiently’. That says President Ursula von der Leyen of the European Commission.
Possible doubling of the EU budget
Von der Leyen does not want to say exactly how much extra money is needed. “But we are not talking about billions, but billions,” she said at a news conference today after the video summit of EU government leaders.
At present, the EU budget is about 1 percent of the aggregate European income. That is about 150 billion euros in total. With a doubling you will end up with 300 billion euros.
Much remains unclear about the details of the recovery fund
The filled package should probably consist of a mix of repayable loans and grants, depending on how hard countries are hit, Von der Leyen said. EU President Charles Michel indicates that countries have very different views on this and that no agreements have yet been reached.
Italy, Greece, Spain and Portugal, among others, want to borrow a lot of money together and then distribute it as a gift, creating a joint debt. The Netherlands does not like that, together with Germany for example. The Netherlands is not necessarily opposed to the issue of gifts, but prefers to do so via the European Structural Funds and the multi-year budget.
Prevent loans from becoming gifts
Prime Minister Rutte emphasizes after the meeting against the ANP that ‘in any case it is necessary to prevent loans from becoming gifts in a creative way’. According to him, it makes little sense to talk about numbers if you do not yet know what is needed and what is needed. “
European Commission President Ursula von der Leyen is now going to work “to turn it into chocolate”, says Rutte. “I’m glad there is an analysis.” According to him, there is also no need to rush, because the countries themselves, the European Central Bank and the EU have already earmarked billions.
Emergency support package adopted
The EUR 540 billion emergency support package of the Eurogroup was also adopted today, as expected. EU finance ministers agreed earlier. This fund can help countries in extreme distress.
The bigger plan is now being moved forward and part of the discussions on the Multiannual Financial Framework, the EU budget. The European Commission will present a further elaborated plan for the EU recovery fund before 6 May and how this should fit into the EU budget.
The ball is now at the European Commission. Once the plan has been worked out, further discussion will take place. Before the coronavirus broke out, the Netherlands was strongly opposed to further raising the EU’s budget ceiling. Then it was a much smaller increase than what is now thought.