France and Germany are offering a European stimulus fund of 500 billion euros (545 billion dollars; 448 billion pounds sterling) to distribute to the EU countries most affected by Covid-19.
In talks Monday, French President Emmanuel Macron and German Chancellor Angela Merkel agreed that the funds should be provided in the form of grants.
The proposal represents a significant change in Ms. Merkel’s position.
Macron said it was a big step forward and “what the eurozone needs to stay united.”
“I think this is a very deep transformation and it is what the European Union and the single market need to remain coherent,” Macron said after the video chat.
Merkel, who previously rejected the idea that nations share the debt, said the European Commission would raise funds for the fund by borrowing from the markets, which would be gradually repaid from the overall EU budget.
The grants from the proposed stimulus fund should also be used to help finance the bloc’s investment in a greener future, the two leaders said.
- Spain relies on basic income to relieve crisis
- Coronavirus “could cost the global economy $ 8.8 billion”
European Commission President Ursula von der Leyen said that the proposal “recognizes the magnitude and the magnitude of the economic challenge facing Europe”.
The President of the European Central Bank (ECB), Christine Lagarde, said that the plan was “ambitious, targeted and welcome”.
However, other EU countries must approve the proposal, and Austrian Chancellor Sebastian Kurz then insisted that his country support lending to member countries hard hit by the coronavirus pandemic, rather than grants.
“Our position remains unchanged,” Kurz wrote in a tweet, adding, “We are awaiting the update. [EU budget] reflect new priorities rather than raising the ceiling. “
Italy and Spain had previously urged their partners from the 27 member countries, especially the wealthiest countries in northern Europe, to show more solidarity by sharing the debt than all EU countries would help reimburse.
The two countries are part of a number of European countries to further ease their coronavirus locking restrictions on Monday.
But as companies reopen after more than two months of nationwide lockdowns, the coronavirus pandemic has already hit economies hard.