In the evening of 9 April, the eurozone Finance Ministers reached an agreement on an economic aid package worth €540 billion. Earlier this week, the Dutch and Italian Finance Ministers clashed, as they could not bridge their differing views. The Dutch were heavily opposed to the introduction of Eurobonds, whereas Italy insisted on this instrument as a sign of European solidarity.
The agreed economic aid package consists of three safety nets:
- €200 billion of investment by the European Investment Bank (EIB) to help companies, and in particular SMEs, to fight the economic fallout as a consequence of the COVID-19 crisis. This investment is backed by a €25 billion European Guarantee Fund set up by the Finance Ministers.
- ‘Pandemic Crisis Support’ of €240 billion from the European Stability Mechanism (ESM), which can be used for direct and indirect medical costs related to COVID-19. During the crisis, loans for these medical costs can be provided without the conditionality of structural reforms, but future loans from the bailout fund will again follow the regular ESM conditionality.
- €100 billion will come from the new short-time work scheme (SURE) of the European Commission. This fund will transfer money to national governments in order to stimulate the introduction of national short-time work schemes, aimed at keeping up employment during the crisis.
A fourth pillar will be worked on in the coming weeks and involves the set up of a Recovery Fund.
Eurogroup President, Mário Centeno, has stated that the ESM support should be operational within two weeks. The investment by the EIB and credit lines by the ESM do not require further legislative approval, but the Commission’s proposal for SURE will still need to be approved by the European Parliament (EP) and the Council of the EU. The EP is expected to approve the scheme during its extraordinary plenary on 16 and 17 April, after which the Council is expected to adopt the scheme by written procedure.
This economic package provides for short and medium-term relief for the European economies, but there will still be a need for a long-term recovery plan. This is expected to get more shape in the Commission’s new proposal for the Multi-annual Financial Framework 2021-2027, which is expected to be published by the end of the April.
Daily updates on the EU measures during the COVID-19 crisis can be found on the coronavirus webpage of Ecommerce Europe.