/Anger as EU orders all nations to chip into ‘unprecedented’ €750bn coronavirus recovery fund for worst-hit cou

Anger as EU orders all nations to chip into ‘unprecedented’ €750bn coronavirus recovery fund for worst-hit cou

A CONTROVERSIAL €750bn bailout of European Union countries worst hit by the coronavirus is set to spark a furious clash.

The “unprecedented” measures will help economies hammered by the pandemic but giving a large chunk away in no strings attached grants has angered some member states.

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 European Commission President Ursula von der Leyen announcing the proposed bailout

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European Commission President Ursula von der Leyen announcing the proposed bailoutCredit: REUTERS

The package was announced by Commission President Ursula von der Leyen who said “this is Europe’s moment” but a final deal still needs to be hammered out.

The bailout comes after French President Emmanuel Macron and Germany Chancellor Angela Merkel gave their backing – despite her earlier reluctance for the money going in grants.

Austria, Denmark, the Netherlands and Sweden – dubbed the Frugal Four – are reluctant to see money given away without any strings attached.

Opposing them is what has been dubbed the Club Med group of nations Italy, Spain, Greece, France and Portugal, which already have high debt.

Their tourism dependent economies have been badly hit by the Covid-19 pandemic in Europe.

A Dutch diplomat, who spoke on conditions of anonymity, said that the “positions are far apart” and “so negotiations will take time”.

“It’s difficult to imagine this proposal will be the end-state of those negotiations,” said the official.

Frugal Four v Club Med

Ahead of the announcement Swedish Finance Minister Magdalena Andersson said: “If it will be grants, who are going to pay the grants?

“Loans, I think is a more interesting way forward to discuss, but we also have to discuss under what conditions shall we give these loans.”

Von der Leyen urged European nations to set aside their divisions about the budget, which will be the first one set after the UK left on January 31.

“We either all go alone, leaving countries, regions and people behind, and accepting a Union of haves and have nots,” she told the European Parliament.

“Or we take that road together, we take that leap forward. For me, the choice is simple, I want us to take a new bold step together.”

Two thirds of the bailout would take the form of grants, while the rest would be made up of more conditions-based loans that countries could apply for.

The money will be borrowed on the world markets, taking advantage of the EU’s AAA credit rating.

Brussels is also looking at raising taxes to pay for the bailout.

Italy and Spain would each be eligible for around €80bn euros in grants, France and Poland would each have access to around €38bn euros, while Germany could get €28bn.

The announcement comes as the European Central Bank warned that soaring debt levels in Eurozone countries could lead to the collapse of the currency.

The bank warned of what it calls “redenomination risk” – some countries quitting the euro or the single currency collapsing altogether – in its twice yearly Financial Stability Report, RFI reports.

 Angela Merkel has backed the plan despite earlier misgivings

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Angela Merkel has backed the plan despite earlier misgivingsCredit: Copyright 2020 The Associated Press. All rights reserved
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