Recovery Plan
This week, the European Commission presented a revamped long-term budget proposal including a major post-pandemic recovery instrument. We compare views on the plans from Ireland, Poland, Portugal and Latvia.
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Sharing the burden
The Irish Timeswrites that the Commission's proposals can be seen as a step forward in European integration, as they involve borrowing by the EU’s executive body to fund spending by Member States. The amount that the Commission would borrow on the financial markets would be guaranteed by the Member States through a form of joint debt. The Commission has proposed €500 billion in grants and €250 billion in loans for Member States to help them cope with the economic slowdown caused by the pandemic. As for the grants, governments would need to apply for them to pay for specific investments or reforms that can help achieve common EU goals. The amount they receive would depend on how badly their economy is affected by the pandemic. The Commission wants to pay back the borrowing through new kinds of taxes, for instance a digital tax and a tax on plastic. The Irish Government has welcomed the announcement of the recovery plan and says that the funds should be allocated to states in need as quickly as possible. First, however, all Member States and the European Parliament will need to approve the Commission's plan.
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The value of EU values
Niezależna reports about the Commission's idea of linking payments from the budget to Member States' compliance with EU values, democratic principles and the rule of law. This idea is not an entirely new one, but the Von der Leyen Commission will push to get the idea through. The Commission says it is prepared to monitor whether countries implement reforms respecting EU values and rule of law and, if need be, will limit their access to financial aid from the EU. The article also discusses the additional €750 billion in form of special grants and loans to help weather the economic effects of the pandemic. This new recovery element of the budget will need to be paid off over the course of 30 years, starting in 2028. By allocating €40 billion to the Just Energy Transition Fund, the EU is also hoping to help Member States achieve climate neutrality and reduce some countries' dependence on fossil fuels. The shift in the budget's priorities shows how the climate crisis is becoming an increasingly pressing matter for EU leaders.
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New income on the horizon
Following the Commission's proposed recovery fund, Diario de Noticias reports that it is estimated that Portugal will receive around €15 billion in non-refundable grants and €11 billion in new loans, depending on how the negotiations with the other Member States go. The article highlights how Brussels wants to finance the non-refundable grants, worth €500 billion in total, through new taxes. The article lists these sources of income proposed by the Commission, which include an extension on emission taxes to the maritime and aviation sectors that will generate around €10 billion in revenue. Moreover, the Commission foresees a new carbon tax, a tax on large operations of companies, a digital tax on companies with a turnover of more than €750 million a year, as well as a levy on non-recycled plastic. Portuguese Prime Minister Antonio Costa says he is satisfied with the proposal, whereas other countries would prefer a thinner recovery fund or a fund solely based on loans.
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A smart investment
Diena writes about Latvia’s Prime Minister Krišjānis Kariņš and President Egils Levits' reaction to the Commission's economic recovery plan. President Levits has emphasised the importance of smart investments in science and education, that will help with the country’s recovery and have a lasting impact on its growth. He also mentioned how EU support for Latvian companies and the creative industry will help the Latvian society regain strength and join forces in the fight against the virus. Diena sums up how the Commission's plans to invest a total of €1.850 trillion in the next 7 years, with most of the money coming from Member States contributions to the Multiannual Financial Framework. €26 billion from the recovery fund will be allocated to programmes such as InvestEU, business recovery and competitiveness.
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