Macron and Merkel propose €500 billion plan to relaunch EU economy

France and Germany on Monday proposed a €500 billion recovery fund to finance the relaunch of the European Union's economy, which is facing the biggest economic crisis since the World War II because of the coronavirus pandemic.

Financed by “borrowing from the market in the name of the EU”, the fund will flow to the “worst hit sectors and regions” in the 27-member bloc.

Countries benefiting from the financing would not have to repay the sum, said France's President Emmanuel Macron. 

“What is sure is that these €500 billion will not be repaid by the beneficiaries,” he said at a joint video news conference with Chancellor Angela Merkel.

“We are convinced that it is not only fair but also necessary to now make available the funds… that we will then gradually repay through several future European budgets,” said Merkel.

The borrowing would not amount to the so-called “coronabonds” sought by Italy and Spain because it would be made and repaid under the framework of EU budgets, rather than a direct mutualisation of debt by member states.

But it nevertheless marks a major shift by Germany, which has until now rebuffed talk of common borrowing.

Germany, the Netherlands and other rich countries had long seen coronabonds as an attempt by the indebted south to unfairly take advantage of the north's fiscal discipline.

But Merkel said the seriousness of the crisis meant that “solidarity” must be the order of the day.

“The aim is to ensure that Europe comes out of the crisis more cohesive and with more solidarity,” said Merkel, calling the proposal “courageous”.



EU chief Ursula von der Leyen on Monday hailed the plan proposed by France and Germany to relaunch the
bloc's economy.

“I welcome the constructive proposal made by France and Germany,” said Von der Leyen who is head of the European Commission, the EU's executive arm that would implement the plan.

“It acknowledges the scope and the size of the economic challenge that Europe faces,” she said.

“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,” Von der Leyen said.

The joint stance by France and Germany is significant as it will put pressure on the EU's more frugal minded member states to contribute the extra money needed to pay for the plan.

The €500 billion will come in addition to the EU's normal spending plans for 2021 through 2027, which are currently under negotiation.

Europe has seen some of the worst effects of the pandemic, with highly indebted countries such as Italy and Spain calling for help from richer partners such as Germany and the Netherlands.

Those countries are reluctant to get into a major borrowing scheme with their southern partners that are seen as overspending and reluctant to implement necessary economic reforms.

“It is going to take willingness to reach an agreement and everyone is going to have to shift their positions,” a European official said on condition of anonymity.

The latest statements by German Chancellor Angela Merkel “will help”, the source added.

Member comments

  1. Wow, what a great plan! Borrow in the market, no doubt millions of EUs will find their way into the pockets of middlemen, then lend it to already indebted nations. Whose corrupt politicians and mafia will skim a good portion. Furthermore, why don’t they wait a few more months to act, so Italy, Spain, and Greece can sinker deeper in debt? Many knew the EU was inept, except in dictating policies, immigration rules, and inane laws, but this crisis has shown how utterly corrupt they are. Germany, France, and Holland acted like Jackals instead of a single union. Hopefully, this will quicken the demise of the EU, and a replacement will be created, which does two things – makes trade more efficient and border crossings for EUROPEANS and Visa holders seamless.

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Germany should prepare for Covid wave in autumn, ministers warn

German health ministers say that tougher Covid restrictions should come back into force if a serious wave emerges in autumn.

Germany should prepare for Covid wave in autumn, ministers warn

Following a video meeting on Monday, the health ministers of Germany’s 16 states said tougher restrictions should be imposed again if they are needed. 

“The corona pandemic is not over yet – we must not be deceived by the current declining incidences,” said Saxony-Anhalt’s health minister Petra Grimm-Benne, of the Social Democrats, who currently chairs the Conference of Health Ministers (GMK).

According to the GMK, new virus variants are expected to appear in autumn and winter. Over the weekend, federal Health Minister Karl Lauterbach (SPD) also warned that the more dangerous Delta variant could return to Germany. “That is why the federal Ministry of Health should draw up a master plan to combat the corona pandemic as soon as possible and coordinate it with the states,” Grimm-Benne said.

Preparations should also include an amendment of the Infection Protection Act, ministers urged. They want to see the states given powers to react to the infection situation in autumn and winter. They called on the government to initiate the legislative process in a timely manner, and get the states actively involved.

The current Infection Protection Act expires on September 23rd this year. Germany has loosened much of its Covid restrictions in the last months, however, face masks are still compulsory on public transport as well as on planes. 

READ ALSO: Do people in Germany still have to wear Covid masks on planes?

The health ministers said that from autumn onwards, it should be possible for states to make masks compulsory indoors if the regional infection situation calls for it. Previously, wearing a Covid mask was obligatory in Germany when shopping and in restaurants and bars when not sitting at a table. 

Furthermore, the so-called 3G rule for accessing some venues and facilities – where people have to present proof of vaccination, recovery, or a negative test – should be implemented again if needed, as well as other infection protection rules, the ministers said. 

Bavaria’s health minister Klaus Holetschek, of the CSU, welcomed the ministers’ unanimous call for a revision of the Infection Protection Act. “The states must be able to take all necessary infection protection measures quickly, effectively, and with legal certainty,” he said.

North Rhine-Westphalia’s health minister Karl-Josef Laumann (CDU) warned that no one should “lull themselves into a false sense of security”.

“We must now prepare for the colder season and use the time to be able to answer important questions about the immunity of the population or the mechanisms of infection chains,” he said.

On Tuesday, Germany reported 86,253 Covid infections within the latest 24 hour period, as well as 215 Covid-related deaths. The 7-day incidence stood at 437.6 infections per 100,000 people. However, experts believe there could be twice as many infections because lots of cases go unreported. 

READ ALSO: Five things to know about the Covid pandemic in Germany right now