European Union to Launch Massive COVID-19 Recovery Plan

In a bid to help the countries rebuild their deteriorating economies, the European Union is likely to launch a massive coronavirus recovery plan worth hundreds of billions of euros.

The EU’s recent plan came into light on Wednesday morning only after the group of 27 nations showed their concern towards anticipated economic recession as an impact of coronavirus pandemic. Practically, most of the countries have broken the EU’s deficit limit as they have spent to keep health care systems, businesses and jobs alive.

During the first week of May 2020, the leaders of Germany and France — historically, the two main drivers of EU integration — agreed on a one-time 500 billion-euro ($543 billion) fund, a proposal that would add further cash to an arsenal of financial measures the bloc is deploying to cope with the economic fallout.

The proposed plan comprises the EU borrowing money in financial markets to help sectors and countries that are particularly affected by the pandemic. The blueprint of European Commission is likely to resemble the Franco-German plan in many ways while attaching the fund to the EU’s next long-term budget.

Now the significant questions come ahead are how much money will take the form of grants and how much would be loans. Austria, Denmark, the Netherlands and Sweden — a group of countries dubbed the “Frugal Four” for their budgetary rectitude — are reluctant to see money given away without any strings attached, and their opposition to grants could hold up the project.

Swedish Finance Minister Magdalena Andersson said, “Will it be grants or loans? And if it will be grants, who are going to pay the grants? Loans, I think is a more interesting way forward to discuss, but we also have to discuss under what conditions shall we give these loans”.

The Commission’s plan is likely to spark heated debate and the EU does not have time for the wrangling to drag on.