18 June 2020

Thus far, three recovery programs have been proposed in response to the economic crisis caused by the coronavirus pandemic. The first recovery program was presented by France and Germany who want the European Commission to issue bonds worth 500 billion euros to distribute as grants to member states. The Franco-German manifesto also includes protectionist proposals that would hurt the EU’s economy, particularly the proposed changes to EU state aid rules.

A second program was proposed by the European Commission, who want a similar fund of 750 billion euros, out of which 250 billion would be given out as loans and 500 billion as grants. The Commission proposes this money could be paid back over a period of 30 years, starting after 2027. The Commission’s fund has skewed redistributive effects that are not warranted by the pandemic alone. Some of the fund will also go to areas, such as agricultural support, which might not have a significant effect on recovery.

The third program was proposed by the “frugal four” – Sweden, Denmark, the Netherlands and Austria – who do not want any debt mutualisation or grants, and instead want a potential recovery fund to consist only of loans. The exact size of this recovery fund is not mentioned.