The coronavirus pandemic has fanned anti-EU sentiment as a result of dimmer economic perspective caused by the lockdowns. European governments, burdened with annual deficits worse than World War II, are finding it hard to maintain political and fiscal unity in the bloc in the face of the deepest recession. Despite the WHO’s pleas to stand together, the pandemic gave rise to nationalism and populism, posing dangers for blocs like EU. Looks like even the Union’s massive 750 billion Euros stimulus package, might not be enough to keep all together.
On Friday, at a Coreper meeting Lithuania, Slovakia, Slovenia, Hungary, Bulgaria and the Czech Republic asked for greater share of the proposed Recovery Fund for the lower-income member states. According to sources, EU member states disagreed on all aspects of the fund, ranging from size, allotment of loans or grants and the spending period of the Fund.
Observing the rising EU scepticism, political and economic analyst believe that nobody should expect results from the 19 June EU summit. EU economy chief Paolo Gentiloni said that if the European Commission’s fund proposal is adopted, then the money from the Fund is expected to travel in the system in spring 2021.
The package which is described as a big step forward by the Union, is seen as EU chief Ursula von der Leyen’s chance to curb the widening splits. As per the proposed fund, if accepted, the European Commission, would provide loans and grants to the sectors severely impacted by the virus. The European Union is working to borrow 750 billion euros ($853 billion) from public markets from January 2021, — the large scale of the recovery fund makes it a historic one.
EU nations have rested their eyes on the European Central Bank to see how far would it go to support the endeavor by buying up government debt, which would worsen preexisting divisions among the richer northern states and poorer southern ones.
“There will certainly be something for the populists to latch on to,” Marchel Alexandrovich, a senior European economist at investment bank Jefferies, told CNBC Monday. “There will be bigger deficits” and “some countries will be hit more than others,” Alexandrovich said. This might spark a feeling that even though the EU seemed to act together, “we’re not coming out of this together,” he said.
Constantine Fraser, Europe analyst at research firm TS Lombard, also told CNBC that “opposition politicians have already started to attack the plan, as too small in size, too slow in its prospective disbursements, or as coming with too much conditionality attached.”
“It will almost certainly help the EU’s image in Italy, but how far it goes in undoing years of rising disenchantment is still unknowable,” he added.
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