European Union Unveils €750 Billion Recovery Plan
The European Union (EU) has unveiled a A$1.2 trillion (€750 billion) recovery plan, dubbed as the ‘Next Generation EU’, to help the region through the COVID-19 crisis. This plan is designed to support an economic recovery that is sustainable, even, inclusive, and fair for all of the 27 Member States. However, all 27 nations within the bloc will be required to unanimously back this plan for it to be approved.
This stimulus package will be on top of the already €1.1 trillion package that has been proposed by the EU. The total financial influence that the European Union will be pumping into the economy to navigate it through the crisis will be €1.85 trillion. Presently, the proposal has been met with opposition from Denmark, Austria, Sweden and the Netherlands- also commonly known as the “frugal four”. These countries have protested this proposal, voicing that the aid should not be given in grants, and instead in low-interest loans only.
Over 350,000 people have been killed worldwide from the virus, with almost 5.8 million reported infected cases. Unemployment rates are soaring to levels equivalent to those seen during the Great Depression, with countries that were already struggling financially prior to the pandemic being the most adversely affected.
This proposal will level the playing field once the pandemic is over so that a greater divide is not created during the recovery process. The Next Generation EU proposal will be distributed across three pillars- to support the Member States with investments and reforms; incentivising private investment by kick-starting the European Union economy; and addressing the lessons of the crisis.
The Member States will be supported by grants and low-interest loans with a focus on providing funds for the rural sector and to improve the unemployment rates for youths. Private investments will be incentivised by providing grants for strategic investments and particularly those in the sustainability and technology sectors. Additionally, health security has been a major issue brought to light during the current COVID-19 crisis due to the insufficient medical infrastructure available. Thus, health programmes, such as EU4Health, rescEU and forHorizon Europe have been designed to prepare the Member States for future health crises such as this, and better equip them to take on the associated challenges.
Interestingly, the European Union is inhabited by 446 million people across a 4 million square kilometre area, taking the place as the third largest population in the world behind China and India. Ensuring the social, environmental, economic and political stability of this region is paramount for these Member States as they emerge from the COVID-19 pandemic. This stimulus package is the first step and will provide the building blocks for the European Union to return to pre-COVID-19 ways of living.
By Caroline Wong
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