The European Union (EU) has reached a historic agreement on a €750 billion stimulus package to help member countries recover from the economic fallout of the COVID-19 pandemic. The deal was reached after four days of intense negotiations at an EU summit in Brussels.
The package, called the Next Generation EU, is aimed at providing support to member countries’ economies hardest hit by the pandemic. It will be financed through borrowing by the European Commission and will be distributed through grants and loans to member states.
The stimulus package is considered crucial for the economic recovery of the EU, which has been hit hard by COVID-19. In the second quarter, the EU’s gross domestic product (GDP) fell by a record 11.9%, the worst decline in its history. Some member countries, such as Italy and Spain, were hit particularly hard, with their economies contracting by more than 18%.
The EU’s stimulus package is also seen as a test of the bloc’s unity, with some member states initially skeptical about the size and nature of the proposed package. However, after days of negotiation, all 27 EU members agreed to the deal.
The package includes €390 billion in grants and €360 billion in low-interest loans. The grants will be distributed among the member states based on a formula that takes into account their population size and economic performance. The loans will be repaid over a period of up to 30 years, with an emphasis on ensuring sustainability and supporting green investments.
The deal is also significant as it marks the first time the EU has taken on such a large amount of debt to finance a stimulus package. This move has been controversial, with some member states concerned about the long-term implications of such borrowing.
Despite the agreement, the stimulus package still needs to be ratified by the European Parliament and individual member states. It is expected to face some opposition, particularly in countries where euroscepticism is high.
Overall, the EU stimulus agreement is a significant step towards supporting the economic recovery of the bloc and its member states. It also demonstrates the EU’s commitment to solidarity and unity, even in the face of a crisis as severe as the COVID-19 pandemic.