Answer given by Mr Gentiloni on behalf of the European Commission
3.7.2020
The pandemic and the necessary containment measures will have a substantial negative economic impact. The Commission published its spring economic forecast on 6 May[1].
The coronavirus pandemic represents a major shock for the global and EU economies, with very severe socioeconomic consequences. The EU economy will experience a recession of historic proportions in 2020. We have to deliver a common answer to the crisis, to ensure the integrity and the cohesion of the Single Market and its shared prosperity.
Our response focuses on limiting crisis damage and ensuring rapid recovery, building resilience while guiding our economies along the path of the green and the digital transitions in a fair manner. We have to make sure that the crisis does not scar permanently our economies.
The EU and the Member States have acted together to mitigate the negative shock of Covid-19. The general escape clause in the Stability and Growth Pact has been activated, and Member States are continuously adopting discretionary and liquidity support measures.
Moreover, three important safety nets for workers, businesses and sovereigns have been agreed, amounting to a package worth up to 540 billion euros. Even if these measures constitute a substantial package, they would not be sufficient. The Commission has just proposed an ambitious and unprecedented European Recovery Plan.
The proposal to create the new recovery instrument — Next Generation EU — consists of EUR 750 billion as well as targeted reinforcements to the long-term EU budget for 2021-2027 and will bring the total financial firepower of the EU budget to EUR 1.85 trillion.
The biggest share of the Next Generation EU will go to the new EUR 560 billion Resilience and Recovery Facility, which will offer large-scale financial support for investments and reforms, to ensure cohesion and resilience of the economies, in line with green and digital transitions.
It will facilitate the economic revival after the Covid-19 pandemic, by providing resources to stabilise the economy and to prevent economic divergences between Member States.
To generate the necessary investment across the whole European Union, the Commission has proposed to amend the Own Resources Decision to allow borrowing and to increase the Own Resources ceiling, which will increase the ‘headroom’, that is to say the space between the payment ceiling in the multiannual EU budget and the own resources ceiling for payments.
Thanks to the legal guarantee by Member States, the Commission will raise funds on markets, which will then be channelled through the EU budget programmes into the Member States.
- [1] https://ec.europa.eu/info/business-economy-euro/economic-performance-and-forecasts/economic-forecasts/spring-2020-economic-forecast-deep-and-uneven-recession-uncertain-recovery_en