EU Will Fight COVID Recession With Green Investment

The European Commission today unveiled a proposal for a €750 billion recovery fund to help countries out of the recession caused by the Coronavirus outbreak.

The fund must still be approved by a majority vote in the European Parliament and a unanimous vote of all 27 EU governments in the European Council. This will be difficult because the so-called “frugal four”, Austria, Denmark, Sweden and the Netherlands, are fiercely resisting the plan because it would for the first time see the EU engage in debt mutualization. €500 billion of the fund would be in the form of grants that countries don’t have to pay back, and it would be borrowed from the international markets using the credit guarantees of all 27 EU countries.

Such an idea was fiercely resisted by Germany ten years ago during the debt crisis, but German Chancellor Angela Merkel has now changed her tune, saying the enormous scale of the coronavirus means it is time for debt collectivization, which some call “eurobonds”, or in these times, “coronabonds”.

Outlining the plan today to the European Parliament, EU Commission President Ursula von der Leyen said the mammoth fund would seek to not only take Europe out of the crisis but also fundamentally transform the EU economy.

“In our union, people businesses and countries depend and rely on each other,” she said. “In our union we know that the boldest measures truly are the safest for the future.”

The fund called “Next Generation EU”, would sit on top of the planned EU budget of €1.1 trillion for the period 2021-27.

“I want to propose a new generational pact for tomorrow”.