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- European Union leaders reached a landmark agreement Tuesday on a $ 860 billion recovery fund earmarked for rebuilding the 27-member bloc.
- At the end of a four-day summit, heads of state agreed to distribute 390 billion euros ($ 446 billion) in grants and 360 billion euros ($ 412 billion) in loans after reaching a commitment to a group of nations nicknamed “Frugal Four”.
- The seven-year EU budget, which supports long-term green and digital investments, was ratified at 1.8 trillion euros ($ 2 trillion).
- The new debt in the recovery package is expected to be repaid by 2058.
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EU leaders agreed on a € 750 billion ($ 860 billion) recovery fund for the reconstruction of the region disrupted by the coronavirus pandemic.
The agreement was made public after European Council President Charles Michel tweeted “Agreement!” early tuesday
“These were, of course, difficult negotiations in very difficult times for all Europeans,” he said in a statement.
French President Emmanuel Macron applauded the end of the successful four-day summit as a historic day for Europe.
After heated debate and a difference of opinion on the details of grants and loans since last Friday, the heads of state reached common ground on a scheme for how to invest the new funds at their first in-person summit in five months.
The leaders finally agreed to distribute 390 billion euros ($ 446 billion) in grants, below the originally proposed 500 billion euros ($ 641 billion) that the Netherlands, Austria, Sweden opposed. and Denmark, the so-called “Frugal Four”.
The 27-member bloc accepted low-interest loans worth 360 billion euros ($ 412 billion) after a compromise with the “Frugal Four” countries, which had expressed concern over whether the funds would be used alone for the health crisis.
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Originally, the total recovery fund was set at an amount of € 500 billion in grants and € 250 billion in loans.
The massive debt that will emerge from the EU recovery plan is expected to be repaid in 2058.
During the summit, leaders also agreed on a seven-year budget of 1.8 trillion euros ($ 2 trillion) and a COVID-19 recovery package aimed at rebuilding the bloc and supporting investment in “green and digital transitions.”
The positive conclusion of the Brussels summit marathon will ease many market participants whose hopes were pinned on the EU recovery deal, said Sam Cooper, vice president of Silicon Valley Bank.
Germany’s benchmark DAX index gained 1.5% in early European trades, climbing to a 5-month high. The Euro-continental Stoxx 50 rose 1.3%.
However, the euro remained neutral and remained at 1.14 against the dollar.
“Although the euro was initially sold after what appears to be a classic case of buying the rumor, selling the fact, many will welcome developments and see intraday weakness as an opportunity to buy a ticket for a long-term euro rally, “Cooper said.
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