Today, European Commission President Ursula Von der Leyen presented the € 750 billion recovery plan for the COVID-19 health crisis, urging European partners to “set aside prejudices” and support the project.
European Council President Charles Michel said: “This is an important step in the decision-making process. Targeted support for sectors and regions most affected by the COVID-19 pandemic will be proven helpful”.
The analysis and evaluation of the Commission’s proposal for the Recovery Fund and the Multiannual Financial Framework (MFF) will begin immediately with the Council’s bodies. At the same time, the President of the European Council and the Council of Ministers will consult with the Member States.
“We will raise the issue with the European Council on 19 June 2020. Everything must be done to reach an agreement before the summer holidays. Our citizens and businesses have been severely affected by the pandemic. We need targeted relief without delay”, stressed the President of the European Council.
An agreement on the Recovery Fund and the MFF will pave the way for Europe’s economic recovery and boost green and digital transition, Charles Michel said, urging all Member States to promptly review the European Commission’s proposal and work constructively towards a compromise for the benefit of the Union.
According to the Commission’s proposal, 93.5% of the total amount of the Recovery Fund is expected to be used for public investment, mainly through grants but also with a significant amount of loans to member countries. The remaining 6.5% is expected to be used as collateral for private investment financing by the EFSI and te InvestEU. These guarantees will allow the mobilization of a significantly larger volume of funding.
According to the Commission, the Recovery Fund is likely to have a permanent positive effect on the real GDP of the EU countries. The investments that will be mobilized are expected to increase the levels of the real EU GDP by about 1.75% in 2021 and in 2022, a rate that will rise to 2.25% by 2024. Even after ten years, real GDP levels are estimated to be at least 1% higher compared to the baseline scenario. Countries with below-average GDP per capita are expected to have the biggest boost in economic activity in the medium term, with GDP levels moving 4.5% higher than the baseline scenario by 2024 for countries in this category with lower debt and 4.25% for countries such as Greece, with higher debt.
It is also estimated that up to two million new jobs will be created across the EU, using the Fund’s resources in the medium term. Employment levels in the period 2021-2024 are expected to be 1% higher on average than in the baseline scenario. The Recovery Fund is not expected to significantly increase debt burden in the EU. GDP debt ratios are estimated to fall for the group of countries with the highest debt at 5 percentage points and for the group of countries with the lowest debt at 3.25. percentage points until 2024.
According to the Commission’s analysis, Croatia is proposed to receive 22.7% of its GDP and 12.1 billion euros; Bulgaria 19.3% of its GDP and 11.7 billion euros and Greece 17, 8% and 33.4 billion euros, while Cyprus will receive 1.43 billion euros. /ibna