After a four-day summit in Brussels, the 27 EU leaders have announced a multibillion-euro package of loans and grants to facilitate recovery after the pandemic.
This morning (21 July), EU leaders announced their agreement on a €750bn Covid-19 recovery package to aid European economies hit by Covid-19.
The decision was reached at a summit event lasting almost five days, despite initial opposition from the so-called frugal nations of the Netherlands, Austria, Sweden and Denmark. The €750bn package proposes that the EU will pay out €390bn in grants and €360bn in loans to countries hit by the pandemic.
Taoiseach Micheál Martin, TD, described it as a “very substantial and significant” package of measures, which will go “a long way to reboot and re-engineer economic recovery” in the EU.
“It has been a very challenging number of days negotiating this package, but it has been worthwhile,” he said. “The Covid-19 challenge is unique. Its impact in terms of our economic, political and social life is severe, and has necessitated a response of this scale and magnitude.”
— Ursula von der Leyen (@vonderleyen) July 21, 2020
From an Irish perspective, Martin welcomed the €300m in funding to protect the Common Agricultural Policy, which will impact farmers in Ireland, as well as a €5bn reserve fund to help countries most impacted by Brexit.
Minister for European Affairs Thomas Byrne, TD, said that Ireland will be “top of the list” for the Brexit fund, which is part of the EU’s overall agreed budget of €1.8trn for the next seven years. Byrne told RTÉ’s Morning Ireland that while it is unclear how much the package will cost Ireland, the country will pay in more than it receives but will benefit from EU grants and loans.
Loans and grants
The €750bn, which represents the biggest ever issuance of joint European debt, will be borrowed on the markets by the EU and doled out in loans and grants to countries across the bloc.
In terms of grants, a total of €312.5bn will be channelled into investment plans developed by national governments. The rest will go to EU-led programmes focused on rural development, green transition and research, among other areas. This will include an increase to the EU’s Horizon fund for research and innovation.
As the countries hit the hardest by the pandemic, Italy and Spain are expected to be the main recipients of the funding, the BBC reported.
A weighted formula will determine how much financial support each EU country receives, with 70pc of the total being determined by a ‘resilience rating’ that takes population and long-term unemployment into account. The remaining 30pc will be based on how much GDP the country has lost because of Covid-19.
‘A huge milestone’
Commenting on the agreement made by the 27 EU leaders, European Commission president Ursula von der Leyen said: “It’s breathtaking to see that we have done it. We have reached a huge milestone setting up the future of the European Union.”
Charles Michel, EU Council president and chair of the summit, described the agreement as a “concrete signal that Europe is a force for action”.
— Charles Michel (@eucopresident) July 21, 2020
“We did it. Europe is strong. Europe is united,” Michel said. “It is about a lot more than money. It is about workers and families, their jobs, their health and their wellbeing.
“I believe this agreement will be seen as a pivotal moment in Europe’s journey, but it will also launch us into the future.”
The proposed deal will now be presented to the European Parliament for further debate and approval.