Abu Dhabi, UAESunday 9 August 2020

CORONAVIRUS

Italy warns Franco-German Covid-19 bailout plans are too little too late

Austria, Denmark, the Netherlands and Sweden have also signalled resistance to an EU borrowing fund

Italian Prime Minister Giuseppe Conte wearing a protective face mask, leaves the Senate as the spread of the coronavirus disease (COVID-19) continues Reuters
Italian Prime Minister Giuseppe Conte wearing a protective face mask, leaves the Senate as the spread of the coronavirus disease (COVID-19) continues Reuters

Italy has warned that plans unveiled by Germany and France for a €500 billion coronavirus bailout are insufficient to keep the bloc’s economy afloat, even as the bloc’s more frugal nations voice resistance.

An announcement by Germany and France proposing the recovery fund has been met with a flurry of statements from member nations as they position themselves over the plans that would offer grants to European Union sectors and regions worst affected by Covid-19.

The warnings from Italy’s Prime Minister Giuseppe Conte for further assistance follows opposition from Europe’s frugal northern nations to the bailout, proposed by the bloc’s two most powerful members.

Mr Conte has contended that the EU, as at the start of the coronavirus crisis, may once again be falling into the trap of reacting too slowly to save members’ ailing economies, while also not providing enough assistance.

Writing in Politico Mr Conte called the plan unveiled by German Chancellor Angela Merkel a “ bold and significant step toward a common European Union response to the pandemic”. He added, however, that it was “only just that: a step”.

“The amount of resources pulled together by all European instruments, including this recovery fund, falls short of the estimates of what many public and private institutions say will be needed to keep the economy afloat,” he wrote.

“Some EU countries are continuing to exert pressure for a ‘business-as-usual’ European budget and a modest recovery fund, with a negligible share of grants. I am strongly convinced that their stance reflects a failure to understand the historic challenges we face,” the Italian prime minister added.

Austria, Denmark, the Netherlands and Sweden, which have generally been as the European Union’s more fiscally conservative nations, are the countries which have most strongly indicated they would oppose the Franco-German plan.

The four nations are opposed to the bailout particularly on the issue of a common borrowing fund and but have said they would be open to offering loans rather than grants.

“Our position remains unchanged. We are ready to help most affected countries with loans,” Austrian Chancellor Sebastian Kurz said on Twitter. “We expect the updated [EU budget] to reflect the new priorities rather than raising the ceiling.”

In the past, during weeks of wrangling over the fund, Germany had also voiced reservations over the pooling of debt and the prospect that its tax payers foot the bill for southern nations like Spain, Italy and France that had been viewed as more financially profligate

Updated: May 21, 2020 01:14 PM

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