750 billion euros, common debt, discounts ... the content of the European recovery plan

“History! Emmanuel Macron did not hide his joy on the fourth day of the European summit which ended shortly before 6 am on Tuesday morning with the signing of an agreement between the 27 countries of the European Union. For the first time since the start of the Covid-19 pandemic, the heads of state and government were physically meeting in Brussels, and not by video conference.

The "deal" was announced on Twitter by the President of the European Council, Charles Michel, at 5:31 am. The record for the longest European summit (dating from 2005, in Nice) was therefore not broken, since it would have had to last until 6:05 am.

Deal!

Here is what to remember from this stimulus plan intended to relieve the economies very hard hit by the coronavirus.

390 billion donations

In total, the recovery plan amounts to 750 billion euros, as announced by the President of the European Commission at the end of May. More than half of this amount, or 390 billion euros, is made up of donations.

Discussions were tense with countries qualified as "frugal" or "tight-fisted" (Austria, the Netherlands, Denmark, Sweden). Named thus for their attachment to the state of public finances and their reluctance to help too much other countries (often in the south) that they accuse of being "cicadas" and of having done nothing to cover their deficit, they wanted to limit this part of the “donations” as much as possible.

Opposite, France and Germany had initially proposed an amount of 500 billion euros. Faced with the categorical refusal of their European partners, they had agreed to lower this amount on several occasions, until a last proposal of 390 billion euros made on Monday evening. The rest, ie 360 ​​billion euros, consists of loans that the various beneficiary states will have to repay.

Spain and Italy are among the countries expected to benefit the most, followed by France.

A debt in common, a first

To find all this money, the European Commission will borrow on the financial markets. The 27 EU countries will have to jointly repay the 390 million euros intended for the "donations" part. They will therefore share a common debt, for the first time in history.

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Until then, the “frugal” States refused any common debt. This question of common “corona” debt obligations (or “corona bonds”) had been at the heart of diplomatic negotiations since the spring.

#EUCO conclusions on the #NextGenerationEU recovery package and the #EUbudget for 2021-2027

👉 https://t.co/0TRghmsIMH pic.twitter.com/hPeVfmw1Li

This recovery plan is backed by the EU's operating budget for the period 2021-2027, which amounts to € 1,074 billion.

Significantly increased discounts

To convince the “frugal” countries to validate an agreement, which had to be approved unanimously as provided for in the treaties, European Council President Charles Michel notably granted them an increase in their rebate. This means that their future contributions to the EU budget will be lower than at present.

Concretely, it was already planned that the four "frugal" receive together three billion euros per year. The agreement provides for a fairly significant increase. The Netherlands pocketed an additional 345 million euros per year, increasing the annual envelope to 1.9 billion. Austria will receive 565 million euros each year, 328 million more than in the previous budget.

All these increases amount to 10 billion more over seven years for these four countries ... and therefore less in European funds.