Beautiful Virgin Islands

Friday, Jul 04, 2025

EU leaders agree on a massive, €750bn covid-19 recovery deal

EU leaders agree on a massive, €750bn covid-19 recovery deal

E.U. Adopts Groundbreaking Stimulus to Fight Coronavirus Recession. For the first time, the 27 countries will borrow and spend vast sums collectively. The $857 billion package includes unprecedented steps to help less wealthy countries, including selling collective debt and giving much of the money as grants, not loans.
The European Council, composed of the leaders of the EU’s 27 member states, agreed on a €750bn ($858bn) package to help countries’ economies recover from covid-19, part of a €1.8trn EU budget for the next seven years. The hard-fought deal shows that the bloc’s members have the sense of solidarity needed to respond collectively to disasters, despite internal political splits and grumbling from some of the rich members that foot most of its bills.

The covid-19 recovery package began as a proposal by Germany’s chancellor, Angela Merkel, and France’s president, Emmanuel Macron. It responded to the threat that the coronavirus could exacerbate the EU’s economic divisions: countries with severe epidemics, or heavy debt loads constraining government spending (such as Italy), faced much worse recessions than those with light epidemics and little debt (such as Germany).

The European Commission, the EU’s executive arm, had originally envisioned €500bn in grants and €250bn in loans. Most significant, the package was to be financed with bonds issued by the commission—the first time EU countries would issue such an enormous amount of collective debt.

The proposal for grants was bitterly opposed by a group of wealthy, mostly northern net-contributor states (nicknamed the “frugals”), led by the Netherlands and joined by Austria, Denmark, Finland and Sweden.

Mark Rutte, the Dutch prime minister, insisted that countries receiving grants carry out economic reforms, and that each individual country be empowered to veto every other country’s plan to spend the aid. As the summit stretched into a third and then a fourth day, the countries most eager for aid—Italy, Spain and Portugal—reproached the “frugals” for failing to compromise.

Another dispute centered on Hungary, where the increasingly autocratic government of Viktor Orban faces EU disciplinary proceedings over the rule of law, and where EU investigators have found extensive corruption. The commission (backed by France, the Netherlands and others) wanted measures to cut off aid if countries failed to respect the rule of law. For Hungary and Poland, which also faces rule-of-law proceedings, this was a red line.

In the end, these seemingly principled disputes were resolved through old-fashioned horse-trading. Mr Rutte and the frugals saw the amount of grants cut to €390bn, while loans were raised to €360bn. The rebates they get to lower their net contributions to the EU budget were increased, along with the amount they get to keep from customs revenue (most of which goes to the EU).

To placate their demands to hold down the overall EU budget, there were cuts to scientific research, industrial investment, rural development and other programmes. Mr Orban and Charles Michel, the European Council president, settled on language putting off mechanisms for rule-of-law sanctions to another day.

The overall result fell short of what some had hoped for. But it was greeted as a triumph in Paris and Berlin, and elsewhere by believers in a more powerful and more federal EU. The programme is equivalent to 4.7% of the EU’s GDP, a macroeconomically significant amount that comes on top of large stimulus spending by national governments. Stockmarkets were buoyed by the news. And it means the EU will engage in large-scale joint borrowing for the first time, giving the bloc significant fiscal resources to fight a recession collectively.

The resistance of Mr Rutte and the frugals was based on the fear that once Europe has agreed to use collective debt once, it will probably do so again. For advocates of a stronger EU, that is not a fear but a hope.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
OpenAI Secures Multimillion-Dollar AI Contracts with Pentagon, India, and Grab
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Elon Musk Critiques Senate Budget Proposal Over Job Losses and Strategic Risks
Los Angeles Riots ended with Federal Investigations into Funding
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Education Secretary Announces Overhaul of Complaints System Amid Rising Parental Grievances
Massive Anti-Government Protests Erupt in Belgrade
Trump Ends Trade Talks with Canada Over Digital Services Tax
UK Government Softens Welfare Reform Plans Amid Labour Party Rebellion
Labour Faces Rebellion Over Disability Benefit Reforms Ahead of Key Vote
Jeff Bezos and Lauren Sánchez Host Lavish Wedding in Venice Amid Protests
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
North Korea to Open New Beach Resort to Boost Tourism Economy
UK Labour Party Faces Internal Tensions Over Welfare Reforms
Andrew Cuomo Hints at Potential November Comeback Amid Democratic Primary Results
Curtis Sliwa Champions His Vision for New York City Amid Rising Crime Concerns
Federal Reserve Proposes Changes to Capital Rule Affecting Major Banks
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Trump Escalates Criticism of Media Over Iran Strike Coverage
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
Big Four Accounting Firms Fined in Exam Cheating Scandal
NATO Members Agree to 5% Defense Spending Target by 2035
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
×