Ahead of Commission's announcement on the recovery fund and EU budget to fight the economic fallout of the pandemic, we look at what the EU has put forward so far to help European countries rebound from the crisis.
ADVERTISEMENTThe European Commission is preparing to make a major announcement about the coronavirus recovery fund to fight the economic fallout.
We are taking a look back at what the European Union has done to help member states so far.
€37 billion - Coronavirus Response Investment Initiative
As a first response the Commission sought to use up current funds in the EU budget. The EU institutions have already signed off in the release of structural funds. This is not 'new' money to be raised but existed already in the EU budget, but a large part was left unused.
"Now with this new initiative, this money can be utilized, so member states receive a lot of fresh funding," explains Zsolt Darvas, an analyst, Bruegel institute.
€750 billion - European Central Bank bond-buying scheme
The European Central Bank (ECB) announced in March a huge government bond purchase programme worth 750 billion euros which runs until the end of this year.
The ECB was buying eurozone debt also in the past, but it was proportionate according to GDP and population size.
"What is very important for the new pandemic emergency purchases is that no such limitations exist, and the ECB can very flexibly purchase government bonds of Eurozone member states."
€100 billion - SURE job protection scheme
In April, the European Commission announced the start of the SURE programme, which finances job protection measures in member states with a credit. It was signed off last week.
"The benefit for member states could be that they get a very cheap loan, potentially with zero interest rate, because the EU can borrow close to zero interest rate in the long term," explains Darvas.
€25 billion - EIB guarantee fund
The European Investment Bank (EIB) announced a 25 billion euros guarantee scheme to support SME's in Europe in April. This could generate up to 200 billion euros worth of credit.
European Stability Mechanism Pandemic Crisis Support (credit line)
The European Stability Mechanism was the main source for Greek bailout with very strict conditions. In May, Eurozone ministers extended the scope of the fund to cover the corona-crisis.
"The only requirement this time is that the member states have to spend this money on health care related expenditures. It's also limited to 2 percent of GDP, it's a much smaller loan."
So far the EU mostly secured cheap credit to members to fight the crisis. Something which causes concerns for certain member states.
"If Germany benefits from any of its facilities, then paying back those loans would not be a problem, but for some other member states which already have a very high public debt like Greece or Italy or perhaps Spain, paying back the new loans might be difficult," says Darvas.
€? EU RECOVERY FUND
If the Franco-German proposal prevails, and the EU could give grants to those in need - that might be a game-changer in the EU's crisis response.
EU Commission president Ursula von der Leyen is expected to announce the number and conditions for the EU budget and recovery fund, the total is expected to exceed one trillion euros. However, 'frugal four' countries (Austria, Denmark, Finland, Sweden) have been reluctant to sign up to a larger EU budget, as well as grants.