German Chancellor Angela Merkel makes a statement when she arrives at a Council of the European Union in Brussels on July 17, 2020, the leaders of the European Union hold their first summit face to face on a post-virus economic rescue plan. .
FRANCISCO SECO
European leaders are back in Brussels for the first time in about five months as they seek to finalize an agreement on a recovery fund of 750 billion euros ($ 855 billion).
The 27 governments of the European Union have disagreed for months on how to mitigate the economic shock of the coronavirus. In May, the European Commission, the EU’s executive arm, suggested raising € 750 billion in public markets to invest in the most affected sectors and countries. However, there are still disagreements on how to distribute that money, how to monitor its application and even if such a high amount of loans is needed.
The first face-to-face meeting of European leaders since the pandemic began is held on Friday. The summit is expected to help leaders get closer to a deal on the merits, but their negotiations could be delayed over the weekend as they work through to the heart of the matter.
“I took enough shirts for the next few days to be able to find a deal here in Brussels,” Luxembourg Prime Minister Xavier Bettel told CNBC’s Squawk Box Europe on Friday.
He added that if there were no progress this weekend, it would be “very bad” for Europe and the financial markets, as it would raise questions about the bloc’s credibility to achieve greater fiscal stimulus.
How to invest
One of the main obstacles before Friday’s summit is how the money will be invested across Europe.
The latest proposal suggests that Member States should present reform plans, describing where they will invest European funds. These would have to be approved by a qualified majority of the 27.
However, there is pressure from the Dutch government to demand a unanimous vote, which means that any country could end up vetoing the plans of another nation.
This has provoked opposition from some countries and other European institutions for giving too much power to nations over the national projects of others.
“My prediction is as good as yours, but the first chance for a deal is between Saturday night and Sunday morning,” former Finnish Prime Minister Alexander Stubb tweeted on Friday.
“The most likely scenario is a couple of nights and a deal on Monday. Otherwise, the deal ends in July.”
Pay the bill
Another big hurdle is how to pay off the new debt. The latest proposal suggests imposing a carbon tax, a tax on plastic waste and a digital tax. However, there is no consensus among the 27 on these taxes.
Speaking to CNBC on Friday, the Prime Minister of Luxembourg said Europe cannot impose a digital tax on its own, as that would make it less attractive to companies compared to other parts of the world.
“I don’t want to send the message to companies that Europe is no longer business friendly,” added Bettel.
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