EU Recovery Plan, A Turning Point Or Same Old Deal?

Today, the European Commission will unveil plans for an unprecedented EU economy recovery package in the face of the coronavirus crisis. The proposed EU rescue fund comes on the heels of last week’s surprise announcement that French President Emmanuel Macron and German Chancellor Angela Merkel had agreed to a 500-billion-euro recovery package set out to help the worst affected countries, locking European member countries together on the fiscal plane for the first time in history. Still, the plan will have to unite all 28 member states, which is far from certain.

Southern European countries, such as badly-hit Italy and Spain, are on board with Macron and Merkel. Yet opposition is brewing from many sides. First, the most visible holdouts are the “Frugal Four” — Austria, Denmark, the Netherlands and Sweden — who have come up with a counterproposal, pushing for loans instead of grants, and requiring strict controls over spending and time limits on repayment.

But resistance is also coming from Central and Eastern Europe, where countries are generally less affected by the coronavirus crisis than elsewhere, and could even become net contributors to the fund. Czech Prime Minister Andrej Babiš quipped that the Franco-German approach would effectively “penalize (countries) for successfully handling the pandemic.”

While some have called the recovery plan a defining moment in EU integration, others say its importance is hugely exaggerated, both by its critics and supporters. Columnist Annika Ström Melin argues in the Swedish daily Dagens Nyheter that although the new recovery fund might change the character of the Union, it still falls far short of transforming the EU into a federation of nations. Given that the fund is not so large in relation to national budgets, and the loans would not be distributed as candy but allocated towards investments focusing on green business and digital transformation, “it is more reasonable to regard the new fund as yet another stone in the pragmatic, ever-changing and problem-solving structure that is the EU.”

Pragmatism or revolution? With the world turned upside-down by COVID-19, it’s a question that goes far beyond European Union politics.

— Michaela Kozminova

Πηγή: worldcrunch.com

 
Euro zone economy to shrink between 8% and 12% in 2020: Lagarde

FRANKFURT (Reuters) – The euro zone economy is likely to shrink between 8% and 12% this year as it struggles to overcome the impact of the coronavirus pandemic, European Central Bank President Christine Lagarde said on Wednesday.

The ECB earlier said the economy could shrink by between 5% and 12%, but speaking in a youth dialogue, Lagarde said that the “mild” scenario is already outdated and the actual outcome would be between the “medium and “severe” scenarios.

Πηγή: reuters.com