Covid-19: EU sketches out plans for ‘massive recovery package’

The European Parliament has approved what MEPs termed ‘a massive recovery and reconstruction’ package to tackle the coronavirus pandemic, including ‘recovery bonds’ guaranteed by the EU budget. Pat Sweet

In a plenary session at the end of last week, the European Parliament endorsed the corona response investment initiative plus (CRII+) package proposed by the European Commission on 2 April by means of an urgency procedure, which it said was necessary to ensure funds begin flowing as soon as possible.

The adopted measures will allow member states to transfer resources between the three main cohesion funds (the European Regional Development Fund, the European Social Fund and the Cohesion Fund), between the different categories of regions and between the funds’ specific priority areas.

Exceptionally, it will be possible to fully finance cohesion policy programmes related to Covid-19 through 100% EU funding during the accounting year starting on 1 July 2020 and ending on 30 June 2021. The measures also simplify programme approval to speed up implementation, make financial instruments easier to use and simplify audits.

New rules will allow farmers to benefit from loans or guarantees at favourable conditions to cover their operational costs of up to €200,000 (£174,550), and also release unused agriculture-related rural development funding.

There are specific measures to mitigate the impact of the Covid-19 outbreak in the fishery and aquaculture industry. These include supporting fishery companies that have to temporarily stop operating, financial aid for aquaculture producers when production is suspended or reduced, support to producer organisations for temporary storage, as well as a more flexible reallocation of national operational funds.

In addition, the package contains funding for financing the provision of protective equipment for workers and volunteers, as well as the temporary 100% co-financing from the EU budget, and also lighter reporting and audit measures during the Covid-19-crisis.

MEPs also approved changes that allow for aid to be delivered using new methods, such as through electronic or paper vouchers, to ensure the safety of everyone involved in the operations and to reach the most vulnerable and excluded.

The Council has to formally approve Parliament's position. The adopted measures will enter into force once published in the Official Journal of the European Union in the coming days.

‘Recovery bonds’

During the debate, MEPs called for a permanent European unemployment reinsurance scheme and wanted to establish a €50bn EU coronavirus solidarity fund.  This fund would support the financial efforts undertaken by the healthcare sectors in all member states during the current crisis, as well as future investments in order to make healthcare systems more resilient and focused on those most in need.

MEPs also approved the development of so-called ‘recovery bonds’. Earlier suggestions that the EU should issue ‘corona bonds’ to pool EU debt and use the cash to pay for economic recovery proved controversial, with the relatively more prosperous northern countries unhappy at bailing out their southern counterparts.

In contrast, the motion passed by MEPs last week said the proposed recovery bonds should not, involve the mutualisation of existing debt, but focus on future investment.

David Sassoli, European Parliament president said: ‘We are trying to make sure that each country's spending will be shared from now on. This proposal counts for the reconstruction plan, it doesn't count for previous debt.’

EU leaders are due to meet via videoconference on April 23 to consider a €540bn package of initiatives.

By Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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