Press "Enter" to skip to content

Explainer: how would EU nations apply for coronavirus retrieval financing?

The European Commission has established its COVID-19 recovery bundle programs, and it is up to EU leaders to negotiate the conditions.

No matter the last amount, member countries will need to meet specific conditions to get any money. This brings up bad memories out of the 2008 fiscal catastrophe, where saving strategies intended biting austerity measures in return.

Even though there might not be exactly the exact same austerity cuts, there’ll be sure requirements such as financing.

Green and Digital retrieval
Member States will need to present a nationwide plan with investment suggestions.

For the Commission to accept it, the trades will need to reevaluate the transition to a greener and more electronic market.

“I believe that the most important difference with the preceding one from the fiscal crisis, is that this time it’s about investments rather than austerity,” describes analyst Sandra Parthie (German Economic Institute).

Parthia clarifies the coronavirus recovery implies EU nations should shell out money, but their spending strategies will subject to Commission scrutiny, in this scenario, their own green, and electronic aspirations.

The Commission reported that any spending strategies need to don’t harm’ to climate objectives. The bloc has put the goal to become carbon neutral by 2050.

Structural reforms?

The next condition is that federal plans need to revise the market and make it more resilient. At this phase, they’re intentionally vague-sounding stipulations, that many interpret as structural reforms. This may indicate changes in the principles regulating the labor market, pension, or education systems.

The so-called frugal nations would be the most reluctant to take the Commission’s strategy and may use this card to negotiate.

“They’ll attempt to connect any cash spent through the recovery program to lots of conditions, particularly concerning financial governance, type of setup of retirement systems, possibly, this type of thing,” states Parthia.

Talking tough

But it may not be their sole goal, through the tough negotiations ahead.

In accordance with Spanish MEP Luis Garicano, the frugal nations will have two aims from the discussions. Firstly, to decrease the percentage of grants and raise the percentage of loans, and second, to present more conditions for getting money.

Another challenge is time-consuming. Nations want the money today, and the discussions could drag on for weeks.

At best authorities could introduce their federal programs next April and could begin getting the cash in 2021.