The EU may need a further €1 trillion to overcome the economic fallout from the coronavirus crisis on top of emergency finance mechanisms already floated, said Paolo Gentiloni, European commissioner for economic and financial affairs.
Speaking to German magazine Der Spiegel, Gentiloni said the EU’s next long-term budget could be the fastest and most efficient way to make money available to kickstart the European economy, reiterating European Commission President Ursula von der Leyen’s call last week for a “huge” investment initiative within the budget.
“The Eurogroup has now put on the table proposals amounting to more than €500 billion to finance health care and short-time working and to help small and medium-sized enterprises,” the former Italian prime minister said. “That leaves at least €1 trillion. That is roughly the order of magnitude that we now have to deal with.”
Asked why he believed the proposal has potential, despite the fact that EU budget negotiations broke down without agreement in February, Gentiloni said he was “optimistic” because “we are living in extraordinary times and I hope that everyone understands that.”
“We can’t wait until the virus makes peace with us before we start rebuilding,” he said. “Reconstruction has to start now, this spring, this summer.”
Not everyone is convinced by the idea though. Pierre Gramegna, Luxembourg’s finance minister, poured cold water on the proposal in an interview with the FT.
“If we were to embark on a discussion that says ‘let’s link this recovery fund to an agreement on the whole MFF,’ which we have been discussing for 18 months to no avail, that would be the best way to bury the recovery fund,” said Gramegna. “If we want to be credible we need to be able to deliver on this before the summer.”