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.
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