EU leaders abandon hope of coronavirus rescue fund as video talks FAIL in just four hours

EU leaders abandon hope of coronavirus rescue fund as video talks FAIL in just four hours

Crunched negotiations were shelved once again after just four hours with EU Council President Charles Michel unable to corral the bloc’s 27 heads of governments. European sources have warned there a deal is unlikely while leaders are forced to hold talks over the EU’s recovery strategy via video link. Despite warnings of impending financial chaos, officials believe it will take a face-to-face meeting before genuine progress can be made.

One senior EU official said: “These are huge negotiations, unprecedented for decades and it is impossible to do by video conference. European compromises need eyeball-to-eyeball contact.

“For an end game to this, a physical meeting will be needed between leaders this summer.”

Eurocrats working behind the scenes are pushing towards a deal finally being stuck in June or July.

In the mean time, Mr Michel has called another European Council summit on May 6, the fifth of its kind again via internet video conference.

Today’s negotiations saw plans to create a coronavirus fund to share the debt burden of the economic recovery amongst member states.

Instead, EU leaders are willing to look at the possibility of using the bloc’s next seven-year budget to distribute grants and loans to needy capitals.

But EU Commission President Ursula von der Leyen played down the possibility of a future row over the concept.

“I am convinced there is only one instrument that can deliver the magnate of this recovery, and that is the European budget,” she said.

“This is about protecting the integrity of our single market and Union. If we succeed, then the investment will have been worth every cent we spend.”

She added: “Of course, it is necessary to find the right balance between grants and loans.”

During the short discussion, Italian prime minister Giuseppe Conte warned of the political cost of failing to reach a solution.

Mr Michel said: “It’s totally right that there is a real sense of urgency, and it’s important to work very hard and take decisions.”

European leaders were accused of acting too little, too late by the head of the European Central Bank.

Christine Lagarde said the EU’s economy could shrink up to 15 percent as a result of slow decision-making while leaders squabble over how best to respond to the crisis.

They were told the EU’s GDP could slump between nine and 15 percent depending on leaders’ decisions, Brussels sources claimed.

Prime ministers and presidents across the continent have been forced to shutdown large swathes of their economies to halt the spread of coronavirus.

Their efforts to protect public health, however, has sent the EU hurtling to its worst recession in living memory.

With the eurozone in danger, leaders have failed to reach an agreement on how best to fund the recovery process, which is likely to run into the trillions of euros.

Mrs von der Leyen has proposed raising €2 trillion by using the budget and a new financial mechanism to raise the cash.

Her plan would see the multi-annual financial framework topped up by a series of new financing mechanisms that would be established at a later date.

“All told, the new proposals will be able to generate at least 2000 billion of investment and expenditure; heavily front-loaded and geared at recovery and resilience,” an internal dossier, seen by, said.

Under Mrs von der Leyen’s plans, the EU would incorporate a €300 billion recovery fund into the 2021-2027 budget and then borrow a further €320 billion.

The Commission wants to use at least half of the funds to offer loans to member states while the remaining cash will be stored inside the budget to fund annual interest bills of around €500 million.

Eurocrats also want to “front load” a number of budget components to make the majority of the funds available within at least two years.

At least €50 billion from the bloc’s cohesion funds have been ring-fenced for that period.

Published at Thu, 23 Apr 2020 18:11:00 +0000