Economy May 28

France hopes for EU recovery fund accord by early July

750-billion euro fund proposed to help EU out of its deepest-ever recession faces opposition from cost-cutting member states; talks next month expected to be tough

by AFP
France hopes for EU recovery fund accord by early July
European Commissioner for Budget and Administration Johannes Hahn holds a news conference on a new proposal for the EU's joint 2021-27 budget and an accompanying Recovery Instrument to kickstart economic activity in the bloc ravaged by the coronavirus in Brussels on May 27, 2020. Photo: François Walschaerts / AFP

France said on Wednesday it hoped for agreement by early July among the 27 European Union nations on a proposed 750-billion-euro post-coronavirus recovery fund, even as it foresaw "difficult" negotiations with "frugal" countries.

European Commission chief Ursula von der Leyen proposed the fund to help the EU out of its deepest-ever recession, but the plan was immediately met with fierce opposition from cost-cutting member states.

The proposed package consists of 500 billion euros in grants and 250 billion euros in loans, but requires unanimous EU approval.

"This courageous and bold proposal by the Commission is a major step, based on the Franco-German agreement of 18 May," said a senior official in the French presidency, briefing reporters on condition of anonymity.

"Negotiations are now needed, but they must not degrade this ambition," he added, meaning the amounts should not be lowered.

An agreement must ideally be reached by summer, "early July", according to the official, to offer a "quick response" to the crisis.

"The goal is that everything is in place by the end of the year and that the recovery plan can get to work as early as next year," he said.

Talks will take place at the European Council summit starting June 18, possibly over two days, said the bureaucrat.

"The negotiations will be difficult," he said, though "even among those described as frugal, they accept the idea of a common loan."

France will fight hard for the 500 billion euros earmarked for grants for Europe's hardest-hit regions and sectors not to be reduced, said the official.

There must be no conditionality attached to the aid, the presidency insisted, but there would be "coordination on reform policies".

"We will not ask of a region or a state to agree in return (for aid) to a form of monitoring by European institutions who will verify each comma as for Greece after the last (debt) crisis," the presidency said.

However, "it makes sense that there is for each country a presentation of reforms for which the money is used."