France and Germany have announced they are backing the creation of an EU bond to raise €500 billion to boost the European economy, severely weakened by the COVID-19 pandemic.
The two leaders, who unveiled their proposal in a joint video press conference, said that work is still needed “to bring together all the member states” as the measure is expected to raise objections in several member states, including the Netherlands and Denmark who have previously opposed the creation of so-called “coronabonds”.
The €500 billion recovery fund proposed would see the European Commission raise money on the markets.
It would come on top of the bloc’s next budget — the Multiannual Financial Framework — and the €540 billion of loans already announced by the Eurogroup.
The money raised by the Commission would be used “in a targeted manner” to support sectors and regions particularly impacted by the pandemic.
Macron and Merkel stressed that the 27 member states will have to agree to the proposal and that much remains to be worked out, including how the Commission’s debt would be reimbursed.
“The current crisis cannot be compared to any crisis in the history of the European Union,” they said in a statement.
“As our societies and economies slowly find their way out of a severe restrictions of recent times, we continue to face extraordinary uncertainties. Our goal, however, is clear: Europe will face this crisis together and we will emerge from it stronger,” they added.
The Commission has welcomed the proposal with President Ursula von der Leyen saying that it “acknowledges the scope and the size of the economic challenge that Europe faces, and rightly puts the emphasis on the need to work on a solution with the European budget at its core.”
“This goes in the direction of the proposal the Commission is working on which will also take into account the views of all Member States and the European Parliament,” she added.
MEPs, however, demanded last week that the recovery package to tackle the COVID-19 economic fallout be worth €2 trillion.