European nations among other parts of the world were hard hit by the ramifications of the Coronavirus pandemic which has taken thousands of lives globally. In an attempt to mitigate implications of the health crisis and to cushion the economy, finance ministers of European Union countries in the Eurozone agreed towards a common emergency plan earlier in April. Through the Eurogroup, finance ministers of the 19 member states reached a deal for a response plan worth more than €500 billion.
The agreement included €200 billion aid which the European Investment Bank will lend to the companies in crisis. Furthermore, the ministers also agreed to help the hard-hit nations in the region with the European Stability Mechanism (ESM) bailout fund for up to €240 billion to support their healthcare system and other issues. Through the fund, the member states will also be aiding €100 billion to a temporary fund supporting workforce in the countries. This will provide a safety net for businesses, workers, and public finances through a temporary instrument called Support to mitigate Unemployment Risks in an Emergency (SURE).
Keeping their differences aside, the ministers reached to an agreement that every euro country will be able to request up to 2% of their GDP to finance direct and indirect costs associated with the crisis. As per a report by the World Economic Forum, with the half-a-trillion package, the EU’s total fiscal response to the epidemic has reached approximately 3.2 trillion euros ($3.5 trillion) which is significantly the biggest in the world.
However, there have been several disagreements from the leaders of the EU countries over the past couple of weeks over the size and nature of the recovery fund to aid the battered economies of European countries and to protect jobs and businesses. As per media reports, leaders of the member states have been deeply divided over the 2021-2027 budget, which has made the agreement on a recovery plan further challenging.
In addition to that, the EU leaders later on April 23 agreed on a trillion euro ($1.08 trillion) worth escape plan that will aid the pandemic recovery and will also be linked to the EU-s long-term budget. The leaders from 27 member countries met over video conference on April 23 and left the crucial details about the budget and its financing to the European Commission after hours of discussions. According to diplomats, the European Commission headed by Ursula von der Leyen has been asked by the EU leaders to present a detailed proposal for a long-term budget which will include an emergency fund by May 6.
Meanwhile, the European leaders have extended support to an initiative from Brussels to raise €7.5 billion to find a vaccine for the novel coronavirus.