EU eyes spending first recovery funds before the end of summer

The European Union hopes to start giving out money from its 750 billion euros coronavirus economic recovery fund before the end of September, the bloc’s top officials said on Friday as they finalized approval of the landmark stimulus.

European Commission President Ursula von der Leyen, European Parliament head David Sassoli and Portuguese Prime Minister Antonio Costa called on the bloc’s 27 countries to move quickly to approve a linked decision to allow the Brussels-based EU executive to borrow the funds on the market.

“The moment the own-resources decision is ratified, the commission will go to the market, raise money and disburse,” von der Leyen told a news conference. “We’re able to disburse 13% in front-loading immediately… by mid-year, we should be able to disburse the first funds.”

Costa said the EU was fighting the pandemic with vaccines and the economic stimulus was another key tool in the bloc’s strategy – a “vitamin” to overcome the related economic crisis.

EU countries will get a share of the money in grants and cheap loans to help them support their pandemic-hit economies from a record recession, promote green growth and beef up digitalization.

The 27 governments have until the end of April to submit detailed plans on how to spend the money and the commission has been locked in a back-and-forth with them to ensure structural reforms come together with mass spending.

Von der Leyen said it was a “humongous” task and that the commission was asking EU countries to improve their plans to make public finances sustainable, reform the labour market and improve tax rules or public procurement laws.

While the Spanish recovery plan has been hailed as a good example, diplomats and officials in the EU hub Brussels said countries from Italy to Germany needed to do more.

“The commission told Germany, for instance, that what they had presented was insufficient and they would not get any money unless they do better,” the head of the eurozone bailout fund ESM, Klaus Regling, told a seminar on Wednesday.

Brussels sources said Berlin had balked at carrying out sensitive pension and labour tax reforms before national elections in September. [Reuters]