The European Union’s executive body launched a plan on Wednesday that would see it raise € 750 billion ($ 825 billion) in financial markets. Two-thirds of the money will be distributed to countries through grants, while the remainder will be offered as loans.
“Our willingness to act must meet the challenges we all face,” European Commission President Ursula von der Leyen said in a statement. The pitch must still be approved by all 27 member countries.
Germany and France, the two biggest economies in Europe, said last week that they would support the use of extensive aid funds that did not require repayment, an acknowledgment of the economic trauma caused by the pandemic. The commission estimates that GDP in 19 countries using the euro will contract 7.75% this year, a record.
European Central Bank President Christine Lagarde said Wednesday the damage could be even greater, estimating losses of between 8% and 12% of GDP.
The European Commission’s plan was welcomed by southern European countries but could still face opposition from more fiscally conservative northern countries, which only wanted to offer loans.
Over the weekend, a group of countries known as “Frugal Four” – Austria, the Netherlands, Sweden and Denmark – refused to compromise made by Germany and France.
This is a story that is developing and will be updated.