The executive arm of the European Union unveiled on Wednesday a plan to raise € 750 billion ($ 825 billion) on the financial markets. Two thirds of the money would be distributed to countries through grants, while the rest would be offered as loans.
“Our willingness to act must meet the challenges that we all face,” said European Commission President Ursula von der Leyen in a statement. The camp has yet to be approved by all 27 member states.
Germany and France, the two largest economies in Europe, said last week that they would support the widespread use of grants that do not require repayment, an acknowledgment of the economic trauma caused by the pandemic. The Commission predicted that GDP in the 19 countries that use the euro will drop by 7.75% this year, a record high.
Christine Lagarde, president of the European Central Bank, said that the damage could be even greater, predicting a loss of between 8% and 12% of GDP.
The European Commission’s plan has been welcomed by southern European countries, but it could still face opposition from the more fiscally conservative Northern countries, which only want to offer loans.
Over the weekend, a group of nations known as “Frugal Four” – Austria, the Netherlands, Sweden and Denmark – rejected the compromise reached by Germany and France.
This is a developing story and will be updated.
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