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European Stimulus package raises brows

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
European stimulus raises concerns and differences between member states

The European economic situation is still under scrutiny, as the European Union members haven’t yet reached a consensus regarding the approval of the financial stimulus designed to counteract the effects of the pandemic. 

Member countries want to raise 750 billion EUR ($839 billion) of grants and loans designed for the sectors which were hit hard by the Coronavirus. The amount represents the typical budget the EU has for 2021-2027. However, the idea is not welcomed by all member countries. The Netherlands, Denmark, Sweden, and Austria would like the financial support to be in loans and not grants, without these being part of the EU debt.

According to Paolo Gentiloni, European Commissioner, the European Union is likely to agree on the borrowing, putting aside their differences. 

On the other side, it is the first time when the European Commission borrows such a large amount. Moreover, from the Eastern European nations' point of view, the plan will help the southern countries prevalently.

At the same time, countries are working separately at their stimulus packages. For example, Germany is to borrow up to 218 billion EUR this year. The debt will be paid in 20 years, with an annual installment of approximately 8 billion EUR. On Wednesday, the finance ministry is expected to propose another supplementary budget that could add 62 billion EUR. It would be the second one since the previous approved in March.   

More about the matter is to be discussed on a video-call on Friday.

Germany30 lost 2.86% during today’s trading session. 

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Sources: reuters.com, cnbc.com.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.