European leaders have reached a breakthrough agreement on a massive joint recovery package to cushion the economic fallout from the coronavirus pandemic.
To tackle the deepest recession in its history, the EU will set up a €750-billion coronavirus fund, partly based on common borrowing, to be handed out as loans and grants to the hardest-hit member states. That comes on top of a seven-year, €1.074-trillion EU budget.
French President Emmanuel Macron hailed the deal as a “historic day for Europe”.
German Chancellor Angela Merkel said “extraordinary events” required “extraordinary new methods,” while Spain’s Prime Minister Pedro Sanchez likened the recovery package to Europe’s post-war Marshall Plan.
The deal’s novelty lies in the fact that for the first time ever, the European Commission is allowed to borrow on international markets to then transfer the funds to member states in need, said Alessandro Leipold, Chief Economist at the Lisbon Council and a former senior official at the International Monetary Fund.
“This is really a show of solidarity and something that was completely unthinkable before COVID-19. So it is ground-breaking in that respect,” Leipold said.
Yet the path to consensus was far from smooth, taking four days and nights of wrangling over money and sovereignty.