FX.co ★ EU fails to agree on recovery plan

The European Union members once again failed to agree on the economic stimulus measures. A long-term and long-awaited plan to support the virus-hit economy caused a lot of questions. However, the EU countries have not found solutions that will meet the interests of all 27 members of the block. Negotiations are always a very difficult process and video-conferencing has only deteriorated the situation.

The proposed plan includes a €750-billion new recovery instrument to relaunch the European economy after the COVID-19 crisis. The scheme would provide €250 billion worth of loans and €500 billion in grants for the EU member states that are mostly hit by the virus outbreak. Such countries as France, Germany, and the worst affected southern EU countries welcomed the plan. However, Austria, the Netherlands, Denmark, and Sweden opposed the proposal. They suppose that the distribution of €500 billion in grants would be inappropriate spending of the budget. They want the funds to be clearly linked to pandemic recovery. Besides, they emphasize the necessity that recipients should commit to economic reform. Austria more than others insists on budgetary discipline promoting the idea that only a part of the funds should be used to boost demand.

Opinions differ, but the EU leaders understand that they should agree on the plan as soon as possible. Otherwise, it may lead to disastrous consequences. The next stage of negotiations is scheduled to take place in July. The EU members will meet in person.