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ROUNDUP 4: After the EU summit: Trillions sought for reconstruction | message

4


(new: Spain’s Foreign Minister)

BRUSSELS (dpa-AFX) – After EU summit ways are under high pressure to find additional trillions for the reconstruction of the European economy after the Corona crisis. Federal Minister of Finance Olaf Scholz said on Friday that after the heads of state and government had given their approval for the first 500 billion euro package, they had the time to develop a solution. But Italy is not the only one to urge haste to have the money readily available.

Chancellor Angela Merkel and the other EU heads of state and government had approved on Thursday an agreed package with loan assistance in the amount of up to 540 billion euros and also agreed to set up a reconstruction fund over which another 1000 billion euros or more should be distributed. However, all details of this fund are controversial, including the scope, financing and use of the money.

EU Commission chief Ursula von der Leyen is now to work out a model that is capable of consensus. Her Vice President Valdis Dombrovskis said on Friday at an event by the Bloomberg agency that the additional sum would be more than 1.5 rather than a trillion euros. The EU Commission is currently planning to present its proposals on May 6.

After a video call with Federal Foreign Minister Heiko Maas, Spain’s foreign ministries María Aránzazu González Laya emphasized that she did not expect a decision on the details of the reconstruction fund until July if Germany took over the EU Council Presidency in the second half of the year. At the same time, she reaffirmed her country’s demand that aid should be provided as non-repayable transfer payments. Anything else would lead to overindebtedness of the recipient countries and thus endanger the internal market.

Von der Leyen has already roughly outlined how she intends to proceed. It wants to expand the financial scope in the EU budget for the planned “Recovery Fund”. In technical jargon: the so-called own funds ceiling – a kind of expenditure cap – is to be raised from 1.2 to 2.0 percent of gross national income for two or three years. This means that the EU countries would have to commit additional sums. The money would not be spent, however, but deposited as guarantees. The change would have to be ratified in all 27 states, including by the Bundestag.

The EU Commission could issue bonds and raise billions on the capital market for economic recovery. Part of the aid is to be subsidies for the countries particularly affected by the pandemic, and another loan. The right balance must be found between the two forms of help, said von der Leyen after the summit.

There is great potential for disputes here: Some northern EU countries want only loans to be granted that have to be paid back by the recipients. Some southern states want non-repayable grants. Grants from the EU budget are not new: they are the basic principle of the EU structural funds, which are intended to compensate for economic differences in the community. It would be new if funds raised through loans were distributed as grants.

Italy’s Foreign Minister Luigi Di Maio praised the fundamental decision for the reconstruction fund as a step in the right direction. “The match is still ongoing. But we can say that we have achieved a first important result: the Recovery Fund,” he said on Facebook. He urged that the funds be available immediately “to help Italian companies, workers and families”.

Federal Finance Minister Scholz, on the other hand, said on Deutschlandfunk that the 500 billion package was already “a fairly quick step on which we can now build on for the time being”. Especially in comparison to the financial crisis ten years ago, action is taken quickly. “We now have the necessary time to develop what is necessary when the lockdown ends, it starts with the reconstruction,” said the SPD politician. First, it has to be determined what is needed at all. Von der Leyen should also analyze this.

Even the head of the European Central Bank, Christine Lagarde, however, urges haste. In the worst of three scenarios, the gross domestic product could be the Euro zone shrink by 15 percent this year, Lagarde said at the summit. She warned of a reaction that was too small and too slow. The answer had to be quick, decisive and flexible.

Against this background came violent criticism of the summit results. The heads of state and government acted despondently, said the SPD MEP Udo Bullmann. The Green Group leader in the European Parliament, Philippe Lamberts, complained that the problem was only postponed. The FDP Europe expert Alexander Graf Lambsdorff spoke in the NDR of a way too slow approach and of a disappointing summit.

The left-wing politician Fabio De Masi once again campaigned for real corona bonds, i.e. joint bonds with full joint liability. Chancellor Merkel has given them a clear refusal. Germany, on the other hand, agreed to make significantly higher contributions to the EU budget. So far, neither Merkel nor Scholz have given an order of magnitude./wim / DP / he



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