EU leaders agree additional €500bn coronavirus package
Late last night EU governments have agreed an additional €500bn (£438.6bn) package to support their coronavirus-ravaged economies in a bid to stave off a steep recession.
The deal was forced through by the bloc’s economic heavyweights France and Germany, which overcame opposition from the Netherlands regarding attaching economic conditions to emergency credit to be given to states.
However, the pact does not lay out how the bloc will finance its recovery, with no mention of using joint debt to do so, a red line for Germany.
Instead, it is given over to the bloc’s leaders to decide whether “innovative financial instruments” should be used, meaning further tense negotiations should be expected at a later date.
Nevertheless, the agreement was hailed by participants. French finance minister Bruno le Maire, who called the plan the most important economic plan in European history, said:
“Europe has shown that it can rise to the occasion of this crisis”.
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The agreement comes after Italian prime minister Guiseppe Conte warned that failure to come together and present a united plan to deal with coronavirus could threaten the existence of the EU.
Early in the week 16 hours of initial talks had failed to finalise a deal.
Portugese finance minister Mario Centeno, who chaired the talks, said €100bn would go to a scheme to subsidize wages so that firms can cut working hours and keep on staff.
The European Investment Bank will step up lending to companies with €200bn and the euro zone’s European Stability Mechanism bailout fund would make €240bn of cheap credit available to governments, he added.
The deal needs ratification from European leaders, which is expected in the coming days.
The package would bring the EU’s total fiscal response to the epidemic to €3.2 trillion, the biggest in the world.