Austria leads revolt against €500bn Franco-German EU rescue plan

EU member states Austria, Sweden, Denmark and the Netherlands have stated their opposition to the French-German plan for a €500bn coronavirus recovery fund that would issue grants, calling for a loans-based approach instead.

French President Emmanuel Macron and German Chancellor Angela Merkel made the surprise proposal last Monday to set up a fund that would offer grants to EU regions and sectors hit hardest by the pandemic.

The idea of grants, however, is anathema to the EU’s self-styled “frugal four”, who generally oppose big spending and fear the proposal will lead to a mutualisation of member states’ debt.

“We propose to create an Emergency Recovery Fund based on a ‘loans for loans’ approach,” the four countries said in a so-called “non-paper” outlining their position to other member states.

The European Commission is to present its own proposal for a recovery fund linked to the EU’s next long-term budget on Wednesday and said it welcomed the initiative from France and Germany.