Overcoming deep divisions over some of its terms, European leaders agreed Tuesday to a historic deal to rebuild EU economies ravaged by the coronavirus crisis.

Under the agreement, which was reached after a contentious five-day summit in Brussels, the EU will borrow 750 billion euros ($857.33 billion) for a recovery fund to be distributed among member states, with 390 billion euros ($446 billion) going toward grants to the hardest hit and the rest provided as loans.

European Commission President Ursula Von Der Leyen and European Council President Charles Michel at the European summit in Brussel.

Leaders also agreed to a new EU budget of nearly 1.1 trillion euros ($1.3 trillion) for 2021-2027, creating combined spending power of about 1.8 trillion euros ($2 trillion).

“We did it! Europe is strong. Europe is united,” European Council President Charles Michel said at a press conference. “This is a good deal, this is a strong deal, and most importantly, this is the right deal for Europe right now.”

As CNN reports, “The European Union is battling a savage recession triggered by the pandemic, and the hardest-hit countries such as Italy and Spain urgently need fresh economic relief.” The European Commission has said it expects the EU economy to shrink 8.3% in 2020, considerably worse than the 7.4% slump predicted two months ago.

“Before Tuesday, agreement had been thwarted by deep divisions over the overall size of the recovery fund, the mix of grants and loans, and the conditions that should be attached to the relief,” CNN said, noting that “Failure to reach an agreement would have risked a ‘two-speed’ economic recovery, with wealthier northern European states bouncing back faster than struggling Italy and Spain.”

With the agreement, the chances of “a cautious, slow recovery” in the second half of this year had increased enormously, German Economy Minister Peter Altmaier said.

The European Commission’s original proposal was to distribute 500 billion euros ($573 billion) via grants, with 250 billion euros offered as loans. The plan to “raise billions of euros on capital markets on behalf of all 27 states [is] an unprecedented act of solidarity in almost seven decades of European integration,” Reuters said.

The EU plans to repay the money by 2058.

STEPHANIE LECOCQ/POOL/AFP via Getty Images

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