This article is from the source 'washpo' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.washingtonpost.com/world/europe/eu-leaders-weigh-massive-virus-economic-recovery-measures/2020/04/23/7dfb99c8-8553-11ea-81a3-9690c9881111_story.html?utm_source=rss&utm_medium=referral&utm_campaign=wp_world

The article has changed 3 times. There is an RSS feed of changes available.

Version 1 Version 2
EU leaders weigh massive virus economic recovery measures EU agrees budget, recovery plan needed to beat virus impact
(about 4 hours later)
BRUSSELS — The new coronavirus is devastating lives, health care systems and economies, and European Union leaders must work together, using every lever at their disposal, to rebuild and restore public faith in the EU project, the head of the bloc’s parliament warned Thursday. BRUSSELS — European Union leaders agreed Thursday to revamp the EU’s long-term budget and set up a massive recovery fund to tackle the impact of the coronavirus and help rebuild the 27-nation bloc’s ravaged economies but deep differences remain over the best way to achieve those goals.
Speaking to reporters after giving a speech to the bloc’s 27 leaders at the start of their video-conference summit, European Parliament President David Sassoli said “we are extremely concerned because we can see a downward spiral, and we are going to need every instrument available.” With more than 100,000 Europeans known to have died from the virus, according to the European Centre for Disease Prevention and Control, and business only slowly starting to open in some countries, the urgent need for funds in hard-hit countries like Italy and Spain has never been starker.
“This pandemic is putting our societies under serious strain. The well-being of each EU member state depends on the well-being of the whole of the EU. We are all in this together,” European Council President Charles Michel told reporters after chairing their video-conference summit.
The uneven impact of the virus on countries with very different budgetary means has eroded trust, with Italy and Spain notably lacking confidence that relatively wealthier northern EU partners like Austria, the Netherlands or Germany — who have suffered less from the disease — are willing to take swift, sweeping measures backed by real economic firepower.
But the leaders did agree to task the European Commission with revamping the EU’s next seven-year budget, due to enter force on Jan. 1 but still the subject of much disagreement, and devise a massive recovery plan. While no figure was put on that plan, officials believe that 1-1.5 trillion euros ($1.1-1.6 trillion) would be needed.
“There is only one instrument that can deliver this magnitude of task behind the recovery and that is the European budget clearly linked to the recovery fund,” European Commission President Ursula von der Leyen said. “The budget is time tested. Everybody knows it. It is trusted by all member states.”
Northern European countries, like the Netherlands and Germany, generally remain reluctant to share too much debt out of fear of having to foot the bill for others, and debate raged Thursday over what form some of the funding should take, either grants or loans.
Von der Leyen said that the budget “investment should be front loaded in the first years and of course it is necessary to find the right balance between grants and loans.” When asked what amount of money might be found with some adjustments, she said: “we’re not talking about billion, we’re talking about trillion.”
Even before these new funds are agreed, the EU’s institutions and member countries combined have mobilized around 3.3 trillion euros ($3.6 trillion) for overburdened health services, suffering small businesses, embattled airlines or wage support for people unable to work.
Despite knowing that the budget revamp will cost her country more money, German Chancellor Angela Merkel endorsed the plan, saying “of course this means Germany must calculate with higher contributions for the next budget ... but that’s right and good.” In normal times, the seven-year budget totals around 1% of EU gross national income, or just over 1 trillion euros.
French President Emmanuel Macron welcomed that the summit found “a consensus on a fast response and a strong one.”
“It is true that there are disagreements on the mechanism,” Macron said, and he insisted that the EU “will need real economic budgetary transfers, not simply only loans, but transfers to the worst affected regions and sectors.”
During their talks, the leaders also endorsed a separate 540-billion-euro ($587 billion) rescue package drawn up by euro area finance ministers which would help pay lost wages, keep companies afloat and fund health care systems. They agreed that it should start operating from June 1.
Earlier, after addressing the leaders online, European Parliament President David Sassoli noted the economic damage the virus has done as European faces perhaps its deepest recession in a century.
“We are extremely concerned because we can see a downward spiral, and we are going to need every instrument available,” he said.
Referring to the massive U.S. aid package in 1948 that helped Europe rebuild after World War II, Sassoli said that “we’ve all called for this new Marshall Plan for Europe, but with a major difference of course. The funds will not be coming from abroad this time, but rather from European countries and economies.”Referring to the massive U.S. aid package in 1948 that helped Europe rebuild after World War II, Sassoli said that “we’ve all called for this new Marshall Plan for Europe, but with a major difference of course. The funds will not be coming from abroad this time, but rather from European countries and economies.”
As businesses cautiously open their doors in some European countries and some of the EU’s half a billion citizens begin to venture out, the leaders are set to endorse a series of urgent spending measures and debate a massive recovery plan they hope to introduce in coming weeks. Even after this summit, much work remains to be done and little time to do it. The EU has been split over the budget for more than a year, with major contributors like Germany and the Netherlands reluctant to fill the estimated 75-billion-euro spending gap left by Britain’s departure from the EU.
The summit — their fourth video-conference since the outbreak struck northern Italy two months ago — comes at an extremely delicate time, with more than 100,000 Europeans known to have died, according to the European Centre for Disease Prevention and Control.
Trust between member states has eroded, with hard-hit Italy and Spain notably lacking confidence that relatively wealthier northern EU partners like Austria, the Netherlands or Germany — who have suffered less from the virus — are willing to take swift, sweeping measures backed by real economic firepower.
Speaking to the German parliament ahead of the meeting, Chancellor Angela Merkel said her government stands ready to help partners in trouble and is already contributing to a 540-billion-euro ($587 billion) rescue package expected to be endorsed later Thursday.
The aim is to have that so-called “safety net” to help pay lost wages, keep companies afloat and fund health care systems in place by June 1.
But Merkel balked at the use of shared debt, dubbed coronabonds, saying that parliaments would have to endorse such a move anyway, meaning it could take too long for such funds to reach nations in trouble.
“One thing is clear: We should be prepared, in the spirit of solidarity, to make significantly higher contributions to the European budget for a period of time,” she told the lawmakers.
Drawing up a recovery plan that can be endorsed by all will be more challenging. The consensus is that it should total at least 1-1.5 trillion euros and target the economic sectors and European regions hit hardest by the coronavirus.
Ahead of Thursday’s summit, officials said that no major breakthroughs are expected. No joint communique will be published, probably just a statement from European Council President Charles Michel, who is chairing the meeting.
The EU’s executive arm, the European Commission, will be tasked with drawing up a recovery plan, which could be incorporated into the bloc’s next seven-year budget, if differences over that spending package can be overcome. Big contributors to the budget, like Germany and the Netherlands, are reluctant to fill the estimated 75-billion-euro spending gap left by Britain’s departure from the EU.
______
David Rising in Berlin contributed to this report. Raf Casert in Brussels and David Rising and Frank Jordans in Berlin contributed to this report.
___
Follow AP news coverage of the coronavirus pandemic at https://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak
Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.