The coronavirus pandemic has cost over 100,00 lives in the European Union.
But what about the financial implications?
The IMF has predicted that the eurozone will fall into a 7.5% recession this year. It’s clear that money will be needed for financial recovery.
So, how much is needed? And how will it be raised?
According to the head of the European Stability Mechanism (ESM), Klaus Regling, Europe will need an additional €500 billion in funding to recover from the pandemic.
In an interview with Italian newspaper Corriere Della Sera, he said economic recovery could end up being “long and costly”. He also said the easiest way to organise funding would be through the European Commission and EU budgeting.
He says, “I would say that for the second phase we need at least another €500 billion from the European institutions, but it could be more. For that, we need to discuss new instruments with an open mind, but also use the existing institutions, because it is easier. Including in particular the Commission and the EU budget. Rethinking European funds can go a long way in keeping the European Union together.”
Last week, EU finance ministers signed off a €540 billion rescue package. This would be linked to the EU ‘s budget, and is designed to support struggling economies during and after the crisis.
This funding includes €240 billion of credit lines from the ESM, a €200 billion fund at the European Investment Bank and €100 billion for the European Commission’s jobless reinsurance plan.
EU leaders will meet via video conference next week to further discuss funding, strategies, and how to finance an economic recovery. This will most likely include calls for some kind of common debt insurance. However, it’s still not clear how the EU will achieve long-term financial security going forward.
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