EU lays out trillion euro escape route from coronavirus pandemic

European Union leaders agreed on Thursday to build a trillion euro emergency fund to help recover from the coronavirus pandemic, avoiding another all-night bust-up but leaving divisive details until the summer.

With the EU’s Brussels headquarters under lockdown – along with most of Europe – the 27 leaders held a four-hour video conference to consider proposals, rallying around a bigger common budget for 2021-27 with a recovery programme.

At around 1% of the EU’s economic output, the multi-year common budget has long been one of the most contentious subjects of debate for its members. Expanding it will not be easy, even if Italy’s Prime Minister Giuseppe Conte hailed “great progress” after the summit ended.

French President Emmanuel Macron said differences continued between EU governments over whether the fund should be transferring grant money, or simply making loans.

“Divisions remain,” Macron told reporters in Paris.

“I’m saying this sincerely: if Europe raises debt to loan to others, that won’t live up to the response we need,” he said, adding that it would saddle already heavily-indebted countries, such as Italy, Belgium and Greece, with yet more debt.

Europe is facing a severe economic shock from the spread of COVID-19, the respiratory disease caused by the novel coronavirus, which has also led to border closures across the bloc and left member states fighting over medical supplies.

European Central Bank Governor Christine Lagarde told the leaders the pandemic could cut between 5% and up to 15% of euro zone economic output, officials and diplomats said.

The euro zone’s economic growth for 2020 is forecast to contract 5.4%, which would make it the worst year since the common currency was introduced in 1999, according to a Reuters poll. That is still better than the International Monetary Fund’s latest forecast for a decline of 7.5%.

News.Az