In a historic first the European Council has agreed a plan for member states to borrow and spend collectively, as part of a €750bn recovery package to rebuild their economies.
The council, composed of leaders of the EU’s 27 member states, negotiated for four days before agreeing the recovery package, which includes a new recovery instrument, Next Generation EU, embedded within a revamped long-term EU budget.
Sector body Cooperatives Europe said it was “relieved” an agreement had been reached.
The Next Generation EU package of grants and loans, coupled with targeted reinforcements to the long-term EU budget for 2021-2027, will bring the total financial firepower of the EU budget to €1.85tn.
Under these plans, the Commission can use its credit rating to borrow €750bn from the financial markets to finance its spending. This will be repaid over a long period of time throughout future EU budgets – not before 2028 and not after 2058.
European Commission president Ursula von der Leyen said: “Europe as a whole has now a big chance to come out stronger from the crisis. Today, we have taken a historic step, we all can be proud of. But another important step remains ahead of us. First and foremost, we now have to work with the European Parliament to secure agreement. We have a lot of work ahead of us, but tonight is a big step forward towards recovery.”
The initial plan put forward by the European Commission allocated €500bn in grants and €250bn in loans but the Council’s compromise deal cut the amount of grants to €390bn, increasing loans to €360bn. Further cuts within the EU budget were made to scientific research, industrial investment, rural development and other programmes as well as within the InvestEU, Horizon 2020, NDICI, and the Just Transition Fund.
Responding to the package, Cooperatives Europe said implementing a European Recovery Plan was of “utmost importance” to boost the development and job creation capacity of European businesses, including co-operatives and social enterprises.
It added that the Covid-19 crisis also highlighted the importance of fostering sustainable and inclusive socio-economic development. Cooperatives Europe is currently working on a policy paper on the role of co-operatives in international development.
The apex said it regretted that the agreed deal had made cuts to funding envisioned in the initial Commission proposal, including to InvestEU, Horizon 2020, NDICI, or Just Transition Fund. It also argued that new financial instruments to be adopted “should also provide the resources needed to meet the priorities linked to the twin transition to a greener and more digital economy”.
Agnès Mathis, director of Cooperatives Europe, commented: “We are now living in crucial times, when decisive and timely policy actions are requested and essential to speed up the economic recovery of our businesses, including co-operatives, from the crisis. EU leaders must not forget that behind those businesses, there are people not only fighting for preserving their jobs and businesses, but also responding to the new challenges of the digital and green transition.”