France and Germany propose €500bn EU recovery grants

20 May 20

France and Germany have proposed that a €500bn EU recovery fund be distributed to the member nations worst affected by the Covid-19 pandemic.

In talks this week, French president Emmanuel Macron and German chancellor Angela Merkel agreed the funds should be allocated as grants.

Macron said it was a “major step forward”. “I believe this is a very deep transformation and that’s what the European Union and the single market needed to remain coherent. It’s what the eurozone needs to remain united,” he said.

The move was welcomed by European Commission president Ursula von der Leyen, who said the proposal “acknowledges the scale of the economic challenge that Europe faces”.

“I welcome the constructive proposal made by France and Germany. It acknowledges the scope and the size of the economic challenge, and rightly puts the emphasis on the need to work on a solution with the European budget at its core,” she said.

“This goes in the direction of the proposal the Commission is working on, which will also take into account the views of all member states and the European Parliament.”

The proposal will need to be approved by the remaining EU member states, with some nations reluctant to allocate the funds as grants. Austrian chancellor Sebastian Kurz insisted that his country backed providing loans to member nations rather than grants.

“Our position remains unchanged,” Kurz said. “We expect the updated [EU budget] to reflect the new priorities rather than raising the ceiling.”

The funds allocated to states will be “based on a clear commitment from member states to follow sound economic policies and an ambitious reform agenda,” the joint document said.

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