From Ecofin comes the definitive ok to the Sure instrument against unemployment caused by Covid: 100 billion granted by the EU to the Member States. There is also some progress on the additional measures available to the EIB, the European Investment Bank, for € 200 billion in loans.
The announcement was made by Vice-President of the European Commission Valdis Dombrovskis, at the end of the summit of the 27 EU financial ministers. “We are close to the agreement on the guarantee fund for businesses launched by Bei, but it was decided by the Eurogroup some time ago that this intervention should be focused on small and medium-sized enterprises and there is discussion of how relevant this focus should be”.
But the focus is on the Recovery Fund, the plan for post coronavirus recovery. Dombrovskis explains that “our ambition is not to increase the funding capacity in the range of hundreds of billions, but rather an amount that exceeds one thousand billion”. With a clarification: “Of course in this case we are talking about both loans and grants. This is the level of ambition that we are discussing in the context of our recovery fund proposal.” And “it’s not just about extra investment for growth but also about reforms to get resources used in the most effective way.”
The thousand billion to which Dombrovskis refers when speaking of the European Commission proposal is therefore more than what the Franco-German 500 billion envisages, money to be collected directly on the market and to be used for grants to the most affected States, including Italy. Ecofin then focused on the proposal by German Chancellor Angela Merkel and French President Emmanuel Macron, who does not all agree.
“The Franco-German proposals are ambitious, targeted and welcome” for the president of the ECB Lagarde. Also the number one of the EU Commission Urusla Von der Leyen and the Commissioner for Economic Affairs Gentiloni, who recalls how the proposal of the EU Commission will arrive next week, and on that “the negotiation will be done. But I don’t think we can underestimate that a country like Germany accepts the idea of 500 billion grants through a loan that the Commission will seek on the markets: it is an unprecedented turning point “.
For Palazzo Chigi the assessment is that “a size of 500 billion euros of transfers alone is certainly a good starting point” and the Minister of Economy Roberto Gualtieri stresses that the Franco-German proposal “goes in the right direction”, that desired by the Government: “A recovery fund financed with common European securities to support the most affected countries and sectors”. However, distrust remains from the ‘frugal’ countries of Northern Europe. Austria, Finland, Sweden and Denmark do not seem to want to give up the request to help states in difficulty through loans.
On May 27 the EU Commission will present its proposal for Recovery instrument which compared to the idea of Paris and Berlin “will not be a copy and paste of the Franco-German proposal,” said Dombrovskis. “The president of the von der Leyen commission – he added – has always said that the financial response that we will make is based on a mix of loans and grants to the states” and that the resources “will be channeled through the EU budget, ensuring effective use of the funds”.