Von der Leyen begs EU leaders for €2 TRILLION war chest to save bloc from economic failure

Von der Leyen begs EU leaders for €2 TRILLION war chest to save bloc from economic failure

The European Commission President wants to use the EU’s next seven-year budget to delivery the recovery war chest to needy member states. 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 Express.co.uk, said.

The strategy will be floated at a virtual meeting of European leaders this afternoon as they prepare a bloc-wide response to the global pandemic.

Mrs von der Leyen “will present the main lines of her proposal on a way forward to recovery during the videoconference of leaders,” her chief spokesman said.

Under the 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.

However, it is far from certain the compromise plan will garner the support of European leaders.

Senior EU officials believe it could take until June or July before any strategy involving the budget is agreed.

One source said: “Things are moving but so far choices have not been made.

“There is a bit of distrust because there are some countries that fear they will have to pay the debt of other countries.”

Further rows are expected to breakout as leaders speak via video link later today.

Disagreement could end in disaster for the EU with its recent efforts to prop up the economy being rendered useless.

French finance minister Bruno Le Maire said: “Everyone is aware that the future of the EU is at stake in how we respond to this extraordinary crisis.

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“All we’ve done to support our economies will be useless if we aren’t able to decide on massive, immediate and simple stimulus.”

The high-level meeting is expected to expose deep divisions within the bloc at a crucial moment in its history.

The defining battle pits Germany’s Angela Merkel and France’s Emmanuel Macron against one another as the influential leaders take opposing sides.

Paris alongside southern and Mediterranean countries – including Italy and Spain – have thrown their weight behind the concept of a rescue effort built up mutualised debt.

However, more frugal member states – Germany, Austria, Denmark, Sweden and the Netherlands – have all voiced unwillingness to underwrite the debt for their neighbours’ rebuilds.

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Berlin has signalled it could sign up to debt sharing if the loans are delivered through the EU budget.

German finance minister Olaf Scholz said: “The instrument we can do it with is the EU budget.

“It must be possible to do things quickly in a crisis situation and then, of course, conduct a refinancing in the years after.

“That’s the best way to do it and it’s in line with European treaties, which is also very important.”

Published at Thu, 23 Apr 2020 12:03:00 +0000