European Union ministers agree on half a trillion euro coronavirus rescue plan

Marco Green
April 10, 2020

The common response includes a joint employment insurance fund worth 100 billion euros, a European Investment Bank instrument meant to supply 200 billion euros of liquidity to companies, as well as credit lines of as much as 240 billion euros from the European Stability Mechanism - the euro area's bailout fund - to backstop states as they go on a spending spree to help economies back on their feet.

It is a similar picture in Europe, where French Finance Minister Bruno Le Maire said he expected GDP to fall by six percent over the year, despite a planned 100-billion-euro ($109 billion) relief plan.

Spain's prime minister warned on Thursday that nationwide confinement would likely last until May even though he said the worst should soon be over and the death toll slowed from one of the world's most devastating outbreaks of the coronavirus. However, she also told them she had been in contact with France's Emmanuel Macron, the Netherlands' Rutte and Italy's Giuseppe Conte, saying that a compromise solution was "very close".

Having already talked for 16 hours, the ministers were to resume discussions at 7 p.m. (1700 GMT) on Thursday.

Things were different on Thursday.

'We are not demanding that Germany and the Netherlands pay our debts, I'm calling for the fiscal rules to be relaxed. Once the meeting started, it took just 30 minutes to declare success.

In the end, the Dutch got a slightly stricter commitment that countries would strengthen their "economic and financial fundamentals" once the crisis was over.

Italy had rejected the idea of using the fund because the money comes with tough conditions that recalled the austerity imposed on Greece, Ireland and other indebted eurozone countries that were bailed out during the eurozone debt crisis in 2010-2015.

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.

As with many an European Union deal, everyone claimed a victory and some of the thornier details were left to be ironed out among the leaders.

For weeks, the 27 European Union member states have failed miserably to show the bloc's supposed solidarity in the face of perhaps its greatest challenge, squabbling not only over money but also go-it-alone border restrictions and bans on medical exports."It looks like an agreement is possible", German Finance Minister Olaf Scholz said, signalling that the Netherlands had softened its stance of demanding tough conditions for countries such as Italy and Spain to draw on aid funds.

"If we do not seize the opportunity to put new life into the European project, the risk of failure is real", he told the BBC.

"We are and will remain opposed to #Eurobonds", Dutch Finance Minister Wopke Hoekstra said on Twitter.

World powers scrambled on Thursday to build a global response to the human and economic catastrophe caused by the coronavirus epidemic, as death tolls in the USA and Europe soared higher.

Mario Centeno, who heads the finance ministers" group from euro countries, called the package of measures agreed upon "totally unprecedented'.

Italian opposition leader Matteo Salvini said he would seek a confidence vote against Gualtieri for agreeing to Thursday's deal.

Other reports by Click Lancashire

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