Opposition as EC proposes €1.85tn economic package

The European Commission has proposed a €1.85 trillion package to save Europe from economic devastation, as it pledged not to repeat past mistakes when millions were unemployed and countries were left nursing unsustainable debts.
Opposition as EC proposes €1.85tn economic package
President of the European Commission, Ursula von der Leyen

The European Commission has proposed a €1.85 trillion package to save Europe from economic devastation, as it pledged not to repeat past mistakes when millions were unemployed and countries were left nursing unsustainable debts.

At the centrepiece is a €750bn fund it calls New Generation EU, which involves it raising billions on sovereign bond markets, including €500bn in grants.

That will lift hopes that companies from Ireland to Greece, will get the help they require, and not be foisted with more offers of costly bank loans.

The recovery plan was first agreed by the EU leaders in principle last month and was cemented last week after Angela Merkel and Emmanuel Macron gave their backing to the EU to raise borrowing on bond markets to spend big to stop the European economy from falling apart.

It still faces opposition from a quartet of fiscally-aware countries, including Sweden.

Commission president Ursula von der Leyen said the Next-Generation EU programme would cover the enormous healthcare and economic costs entailed in fighting Covid-19.

The money may not need to be paid back through 2058, helping Italy, Spain, and Greece in particular, but also by the Irish State, in fighting the pandemic, with cheap borrowings.

She said that the Next-Generation EU project, along with plans to pump up spending through the current and future EU budgets, will amount to total firepower of €1.85 trillion through 2027.

“The coronavirus has shaken Europe and the world to its core, testing healthcare and welfare systems, our societies and economies and our way of living and working together,” Ms von der Leyen said.

Tom McDonnell, co-head of the think tank, the Nevin Economic Research Institute, said the huge firepower would give the existing Government or a new administration here the confidence to go out and design a national recovery package.

Meanwhile, it is likely far too early to taper or cut the pandemic unemployment payments because they help to support large areas of the stricken economy, the research professor of the Economic and Social Research Institute Kieran McQuinn has said.

Unveiling its report on the Covid-19 economic fallout, Prof McQuinn said it was “quite frankly unlikely” that people on the €350-a-week pandemic unemployment payments would revert to the standard unemployment payment at the end of June and the payments would likely continue “in some shape or form for the rest of the year”.

The ESRI, which says the Irish economy faces the largest recession in history, projects in its central scenario that GDP will slump 12% this year.

Meanwhile, from today passengers arriving into Ireland will be required to complete a Covid-19 Passenger Locator Form. Failure to do so will be an offence.

People arriving from Northern Ireland, working in defined essential supply chain roles, foreign diplomats and passengers who are transiting through the State without leaving the port or airport will not be required to complete the form.

It comes as the Covid-19 death toll rose to 1,631 after a further 17 deaths were confirmed.

There were 73 new cases of the virus bringing the total number of people with Covid-19 to 24,803.

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