The European Union (EU) will be able to start in June the historic process of issuing common debt to finance its recovery plan intended to overcome the economic consequences of the Covid-19 pandemic, announced on Monday, May 31, in the evening, the European Council in a press release.
The European body, which represents the member states, has announced that it has “Formally received the approval notifications from all 27, which allows the Commission to borrow on behalf of the EU on the capital markets”. The recovery plan, dubbed “Next Generation EU”, “Start tomorrow [mardi] ! The European Union is now in a position to obtain the necessary funding ”, thus welcomed the Portuguese Prime Minister, Antonio Costa, whose country has held the rotating presidency of the Council of the EU since January.
In total, 672 billion euros in grants and loans are to be granted to EU member countries, as part of a global recovery plan of 750 billion euros. This plan is financed by a joint recourse to the loan, unprecedented, which embodies European solidarity in the face of the Covid-19 crisis.
“Concretely, the Commission is launching this 1is June the process of issuing debt by bringing together major international and European banks, and the issuance of securities will take place this month ”, for his part, declared the French Secretary of State for European Affairs, Clément Beaune, in an interview with Echos. The amount of the first European debt issue will be “Around 10 billion euros”, he said, ensuring that “The appetite of the market should be very important and the interest rates very favorable”.
Spain and Italy, the main beneficiaries
The parliaments of Austria and Poland approved the common debt mechanism on Thursday, allowing its ratification process to be concluded. The implementation of the plan, concluded in July 2020 after difficult negotiations, has often been criticized for its slowness. The first payments are scheduled for next July. These will be pre-financing representing 13% of the total grants. The disbursements will be spread over several years.
EU countries began to submit their national investment plans associated with structural reforms in Brussels at the end of April, in order to solicit funding. Twenty-two states out of twenty-seven have already submitted their draft to the Commission, which has two months to examine and approve them. The European Council, which represents the member states, will then have a month to give the green light. Spain and Italy should be the main beneficiaries with nearly 70 billion euros each, ahead of France (nearly 40 billion).
The money should be used to finance the thermal renovation of buildings, railway projects, charging stations for electric vehicles, high-speed telecommunications networks or even data storage infrastructures.