Health and Healthcare Systems

The EU has agreed a coronavirus rescue plan worth half a trillion euros

This article was published in collaboration with Reuters.
A man wearing a face mask walks past the European Commission headquarters as the spread of coronavirus disease (COVID-19) continues in Brussels, Belgium April 9, 2020.  REUTERS/Yves Herman - RC201G9MB4DV

The package will bring the EU’s total fiscal response to the epidemic to €3.2 trillion. Image: REUTERS/Yves Herman

Gabriela Baczynska
EU Correspondent , Reuters
Jan Strupczewski
Deputy Bureau Chief, Reuters
Share:
Our Impact
What's the World Economic Forum doing to accelerate action on Health and Healthcare Systems?
The Big Picture
Explore and monitor how Social Protection is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Social Protection

  • European Union finance minters have settled on a coronavirus financial support package worth half-a-trillion euros.
  • It includes €200 billion, which The European Investment Bank will lend to companies, and €240 billion in cheap credit, which The European Stability Mechanism bailout fund will make available to governments.
  • The package will bring the EU’s total fiscal response to the epidemic to €3.2 trillion ($3.5 trillion), the biggest in the world.
  • The package has yet to be approved by the EU's 27 national leaders.

European Union finance ministers agreed on 9th April on half-a-trillion euros worth of support for their coronavirus-battered economies but left open the question of how to finance recovery in the bloc headed for a steep recession.

Have you read?

The agreement was reached after EU powerhouse Germany, as well as France, put their feet down to end opposition from the Netherlands over attaching economic conditions to emergency credit for governments weathering the impacts of the pandemic, and offered Italy assurances that the bloc would show solidarity.

But the deal does not mention using joint debt to finance recovery - something Italy, France and Spain pushed strongly for but which is a red line for Germany, the Netherlands, Finland and Austria.

It only defers to the bloc’s 27 national leaders whether “innovative financial instruments” should be applied, meaning many more fraught discussions on the matter were still ahead.

“Europe has shown that it can rise to the occasion of this crisis,” said French Finance Minister Bruno Le Maire, praising what he said was the most important economic plan in EU history.

European stocks have been bouncing back since hitting a low in mid-March.
European stocks have been bouncing back since hitting a low in mid-March, but are still a long way from their peaks. Image: Bloomberg

Earlier on 9th April, Italian Prime Minister Giuseppe Conte warned that the EU’s very existence would be under threat if it could not come together to combat the COVID-19 pandemic caused by the novel coronavirus.

Italian Prime Minister Giuseppe Conte addresses the Senate, the upper house of parliament, on the spread of coronavirus disease (COVID-19), in Rome, Italy, March 26, 2020 REUTERS/Alberto Lingria - RC2LRF9DIH6A
Italian Prime Minister Giuseppe Conte urged the need for European co-operation. Image: REUTERS/Alberto Lingria

For weeks, EU member states have struggled to present a united front in the face of the pandemic, squabbling over money, medical equipment and drugs, border restrictions and trade curbs, amid fraught talks laying bare their bitter divisions.

While Le Maire said the agreement paved the way for debt mutualisation, his Dutch counterpart, Wopke Hoekstra, stressed the opposite.

“We are and will remain opposed to eurobonds. We think this concept will not help Europa or the Netherlands in the long-term,” Hoekstra said after talks ended.

Strained solidarity

Mario Centeno, who chaired the talks after sixteen hours of all-night discussions earlier this week failed to yield a deal, said 100 billion euros would go to a scheme to subsidise wages so that firms can cut working hours, not jobs.

The European Investment Bank would step up lending to companies with 200 billion euros and the euro zone’s European Stability Mechanism (ESM) bailout fund would make 240 billion euros of cheap credit available to governments, he said.

German Chancellor Angela Merkel earlier in the day talked on the phone with Conte and Dutch Prime Minister Mark Rutte, paving the way for the eventual agreement, which now awaits approval from the bloc’s 27 national leaders in the coming days.

She said she agreed with Conte on the “urgent need for solidarity in Europe, which is going through one of its most difficult hours, if not the most difficult”.

German Chancellor Angela Merkel arrives for a media briefing about measures of the German government to avoid further spread of the coronavirus disease (COVID-19) at the chancellery in Berlin, Germany, April 9, 2020. Markus Schreiber/Pool - RC211G9CV1SN
German Chancellor Angela Merkel considers the COVID-19 pandemic to be one of Europe's darkest periods. Image: REUTERS

Merkel also made clear Berlin would not agree to jointly issued debt, but said other financial avenues were available.

Discussions on that have so far been fraught between the more fiscally conservative north and the indebted south, which has been hit hardest by the pandemic.

The package would bring the EU’s total fiscal response to the epidemic to 3.2 trillion euros ($3.5 trillion), the biggest in the world.

But controversy remained over how to kickstart economic growth, with European Economics Commissioner, Paolo Gentiloni, saying the money for that could be raised against the bloc’s next joint budget for 2021-27.

($1 = 0.9205 euros)

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Health and Healthcare SystemsGeographies in Depth
Share:
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

How health data collaboration can help unlock inclusive healthcare

Laura Heinrich and Antonio Spina

May 27, 2024

About Us

Events

Media

Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum