EU fiscal integration process: difficult achievement of 1.82 trillion Euro expenditure plan

category:Finance
 EU fiscal integration process: difficult achievement of 1.82 trillion Euro expenditure plan


Behind this was a gunpowder negotiation. According to Reuters, two diplomats at the scene said French President Marco u00f3 n hit the table with his fist, accusing the thrifty four countries of obstructing the negotiations, according to two diplomats at the scene. The Polish Prime Minister directly said that the opposition Nordic countries were a group of selfish countries, only considering their own interests. According to EU officials participating in the meeting, the Dutch Prime Minister luite became the target of public criticism for his tough veto of many original provisions of the EU recovery plan, and was named Mr. disagreer by some national leaders. After a series of heated debates, all night bargaining and negotiations on the verge of collapse, the EU parties finally reached a compromise.

This is the largest fiscal spending plan in the history of the European Union. According to the plan, the total amount of recovery fund to stimulate the economy is set at 750 billion euro, which aims to inject strong impetus into the recovery of Europe after the epidemic. Of the 750 billion euro, 390 billion euro will be provided free of charge to countries and regions seriously affected by the epidemic, so it will not increase the debt burden of the recipients, and the other 360 billion will be low interest loans. The European Union as a whole will borrow 750 billion euros in financial markets. The leaders also finalized the EUs multi-year budget framework for 2021-2027, with a total amount of 1.074 trillion euros. Together with the 750 billion recovery fund, the total amount is more than 1.82 trillion euro.

We did it, said Michelle, President of the European Council. Europe is strong, Europe is united. We have an agreement. This is a historic day for the European Union and the euro zone, Mr. marklon tweeted excitedly after the agreement was reached

Extraordinary measures in extraordinary times

This is an extraordinary measure taken by the EU in extraordinary times. Novel coronavirus pneumonia there was no parallel in history. It not only threatened the lives and public health of the European Union, but also led Europe to an unprecedented economic crisis.

Novel coronavirus pneumonia cases have been reported in the European Union and the European Economic Zone by July 20th, and 180 thousand deaths have been reported, according to the latest statistics from the European CDC. According to the latest data from Eurostat, the GDP of the EU and the euro zone fell by 3.2% and 3.6% respectively in the first quarter of this year, the largest quarterly decline since 1995. In the European Economic Outlook report for the summer of 2020 released by the European Commission on July 7, the EU GDP will shrink by 8.3% in 2020, and the follow-up recovery will also face multiple risks and challenges such as the possible second outbreak of the epidemic.

Novel coronavirus pneumonia is the impact of the EU Member States agreement on fiscal expenditure plans, especially the recovery fund . Italy, Spain and other countries that have suffered the most severe impact will certainly have to rescue. There is no objection from the EU countries, because if they do not rescue, they will probably evolve into more serious national financial bankruptcy and even EU political turmoil. All countries need to negotiate is how to save. Ding Chun, director of the center for European Studies at Fudan University, told this newspaper, the internal and external pressure facing the EU is also an important reason for countries to reach an agreement. At home, the EU faces a series of problems, such as epidemic situation, refugees, terrorist attacks, populism, etc.; externally, the EU is confronted with contradictions in trade, NATO and other aspects with the United States. More importantly, the EU feels the threat of being marginalized in the international arena due to its relative decline in strength. At this moment, the EU must be responsible and cohesive. On this point, the European Commission and the heads of state agree.

Germany and France contributed a lot to the agreement reached by EU countries this time, especially the success of the recovery fund. On June 29, Merkel met with French President marcelon, calling on the thrifty countries to give a green light to the 750 billion euro recovery fund. On July 1, Germany officially became the rotating president of the European Council. Then Merkel began her persuasion. On the 9th, she met with the toughest Dutch Prime Minister Ruud at the prime ministers office. A week after that, Merkel met with Italian Prime Minister Conte and Spanish Prime Minister Sanchez in Berlin.

Ding Chun pointed out: one of the key points for everyones happiness this time is that the attitude of Germany, which has been inclined to be austere and thrifty, has changed. There are two reasons behind this: first, as the rotating presidency of the European Union, Germany hopes to do something to adjust the general direction of the EU; second, for German Chancellor Angela Merkel, it involves her political heritage.

The process of integration remains to be seen

It is generally believed that the EU has historically reached an economic recovery fund of 750 billion euro, which is not only huge in amount, but more importantly, 390 billion euro of which is not repayable. Although there is still some distance from the planned 500 billion euro, the EU has taken a key step to build the common financial and credit foundation of the EU. For the first time, the EU has established collective lending capacity and formulated a recovery plan. With this recovery plan, the European budget will double in the next three years.

In a sense, the agreement makes the EU take a step towards fiscal integration. Ding Chun said, the real controversy in this negotiation lies in the free allocation of 500 billion euro. For a long time, in order to avoid being milked cows, the EU member states with strict financial discipline and strong economic strength are not willing to give their own funds to other EU Member States free of charge. In this negotiation, with the vigorous promotion of Germany and France, the proportion of gratis funding was reduced. Taking into account the demands of these countries, there was a reduction and exemption of their financial budgets, and at the same time, it also put forward requirements for the recipient countries in terms of system improvement.

For EU integration, the positive significance of the outcome of the summit is obvious. However, it remains to be seen whether this is a good start and whether it can become a mechanism or path to push EU Member States closer and closer. Ding Chun said, novel coronavirus pneumonia is the background of this summit. This is an occasional exogenous shock, which is temporary in theory. Although the measures taken this time are a breakthrough for the EU, it remains to be seen whether they can be normalized. Moreover, there are many uncertain factors about the implementation process of the plan. For example, there is no rigid constraint mechanism on the requirements of the recipient countries, whether the countries with strong financial strength represented by the thrifty countries will have any objection in the implementation process; and whether the attitude of German politics will change when it enters the post Merkel period. After all, the conflicts of interests between different countries within the EU have not disappeared, and the next development remains to be seen.

On July 21, German Chancellor Angela Merkel (Center right) and French President marcelon (center left) prepare to attend a press conference at the EU headquarters in Brussels, Belgium. Xinhua / Reuters source: Peoples Daily Overseas Edition editor in charge: Yang Zeyu_ NF6036

On July 21, German Chancellor Angela Merkel (Center right) and French President marcelon (center left) prepare to attend a press conference at the EU headquarters in Brussels, Belgium.

Xinhua / Reuters