So close yet so far: EU seeks deal on stimulus for COVID-hit economy

[webfact]

So close yet so far: EU seeks deal on stimulus for COVID-hit economy

By Gabriela Baczynska and Robin Emmott

 

A European Union flag flutters outside the European Commission headquarters, ahead of an EU leaders summit at the European Council headquarters, in Brussels, Belgium July 16, 2020. REUTERS/Yves Herman

 

WARSAW/BRUSSELS (Reuters) - European Union leaders will seek to overcome their differences over a proposed stimulus to kick-start economic growth stifled by the coronavirus as they meet in Brussels on Friday for their first face-to-face talks since the pandemic hit.

 

Dutch opposition and a threat of a Hungarian veto weigh on chances for a deal on the EU's 2021-27 budget envisaged at slightly above 1 trillion euros and an attached new recovery fund worth 750 billion euros meant to help rebuild the southern economies affected the most by the crisis.

 

"For the markets, for the general image of the European Union, for the political message towards the member states and towards our citizens, it would be fantastic if we reached an agreement," Croatian Prime Minister Andrej Plenkovic said late on Thursday.

 

But with major differences persisting on the scale and scope of recovery funding, as well as on the budget, he added: "It's never certain whether an agreement will be finalised, or not."

 

The 27 EU heads will gather from 0800 GMT in a room equipped with hand sanitizers and disinfected headsets to provide translation in the Brussels EU headquarters, which will be unusually void of journalists as a health precaution.

 

The stakes are high with EU economies in free fall, immediate relief measures like short-time work schemes running out this summer and paving the way for what some fear would be an autumn of deep economic malaise and social discontent.

 

That would risk damaging the EU, already struggling with the protracted saga of Brexit and bruised by its past crises from the financial meltdown to migration feuds, exposing it to more eurosceptic, nationalist and protectionist forces and weakening its standing against China, Russia or the United States.

 

"Everybody knows that autumn will be difficult," said a senior government official in one EU state. "It would be really good for Europe to send signal to all that we are united."

 

After months of feuds over medicines, medical gear, border closures and money to respond to the coronavirus, the EU has already agreed half-a-trillion-euro scheme to cushion the first hit of the crisis and narrowed some differences over how to finance kick-starting economic growth over the long term.

 

But major gaps must still be bridged if the 27 are to reach the necessary unanimous agreement in two days of planned talks.

 

Dutch Prime Minister Mark Rutte is the main holdout among the thrifty camp of northern, wealthy EU countries demanding a smaller overall package, economic reforms as condition to getting funds, inflated vetting process for granting aid and keeping rebates for net payers to the bloc's joint coffers.

 

The high-debt, ailing southern countries like Italy and Spain call for the recovery financing to come as free grants rather than repayable loans, while Hungary has threatened to veto the whole package over a proposed new mechanism to freeze payouts for countries undercutting democratic values.

 

Among the other sticking points are when to make the recovery money available and for how long; how to repay debt to be acquired by the bloc's executive European Commission to collect these extra funds; and how much should be channeled to green projects.

 

(Reporting by Gabriela Baczynska in Warsaw and Robin Emmott in Brussels; Additional reporting by Andreas Rinke in Berlin; Writing by Gabriela Baczynska; Editing by Matthew Lewis)

 

-- © Copyright Reuters 2020-07-17

 

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[robblok]

Yea i read the news, The Dutch and I agree don't want those southern countries get money all the time without reforms. This one of the things i do hate about the EU those begging southern countries who don't want to adjust. Should have split the EU up in a North and South part. 

 

I like the idea of a trade block and all, but I don't like the idea of paying for the bad spending of those southern countries. 

[JonnyF]

36 minutes ago, robblok said:

Yea i read the news, The Dutch and I agree don't want those southern countries get money all the time without reforms. This one of the things i do hate about the EU those begging southern countries who don't want to adjust. Should have split the EU up in a North and South part. 

 

I like the idea of a trade block and all, but I don't like the idea of paying for the bad spending of those southern countries. 

Yes a trade bloc was a good idea. That is what it should have remained and not morphed into a federalist project.

 

The prudent Northern countries bailing out the less prudent southern countries at the behest of the EU commission gets old real quick but you've had plenty of time to get used to it.

 

Thankfully, Britain is out and therefore will be able to decide how and where it spends it's money on it's own citizens. 

[robblok]

Just now, JonnyF said:

Yes a trade bloc was a good idea. That is what it should have remained and not morphed into a federalist project.

 

The prudent Northern countries bailing out the less prudent southern countries at the behest of the EU commission gets old real quick but you've had plenty of time to get used to it.

 

Thankfully, Britain is out and therefore will be able to decide how and where it spends it's money on it's own citizens. 

I still see the benefits of the block better in then out. But yes the northern countries bailing out the southern countries gets old. I hope our PM veto's it all. This constant bailing them out without conditions should stop. They keep spending too much and then expect others to bail them out. 

[melvinmelvin]

3 hours ago, JonnyF said:

Yes a trade bloc was a good idea. That is what it should have remained and not morphed into a federalist project.

 

The prudent Northern countries bailing out the less prudent southern countries at the behest of the EU commission gets old real quick but you've had plenty of time to get used to it.

 

Thankfully, Britain is out and therefore will be able to decide how and where it spends it's money on it's own citizens. 

 

avoiding a split north/south in Europe is an agreed objective since long

 

the bailing is not on the behest of the CEC its on the behest of the EU Council, ie the members states,

including UK (up to now)

 

[soalbundy]

6 hours ago, JonnyF said:

Yes a trade bloc was a good idea. That is what it should have remained and not morphed into a federalist project.

 

The prudent Northern countries bailing out the less prudent southern countries at the behest of the EU commission gets old real quick but you've had plenty of time to get used to it.

 

Thankfully, Britain is out and therefore will be able to decide how and where it spends it's money on it's own citizens. 

..... on its own citizens. That's a joke right? Firstly the UK is up to its neck in debt, higher covid deaths and a higher financial downturn than any other European country and secondly when was the last time that the UK actually did something for its citizens? VAT will be lowered but you can bet that your income tax will go up just like the inheritance tax, road tax and council tax, it's amazing anybody still lives there.

[Baerboxer]

6 hours ago, robblok said:

I still see the benefits of the block better in then out. But yes the northern countries bailing out the southern countries gets old. I hope our PM veto's it all. This constant bailing them out without conditions should stop. They keep spending too much and then expect others to bail them out. 

 

Of course. The habit is created and then it become a habit no one wants to break.

 

I remember there were so many scams going on in the South Europe too. Lots of bridges, roads etc getting large grants and then the money being skimmed and used for other things. There's no doubt that some countries have been milking the system for a longtime. And while the milk keeps flowing, they ain't gonna change.

 

But, frankly, if it's a loan rather than grant, who thinks it will ever get repaid!

[JonnyF]

2 hours ago, melvinmelvin said:

 

avoiding a split north/south in Europe is an agreed objective since long

 

the bailing is not on the behest of the CEC its on the behest of the EU Council, ie the members states,

including UK (up to now)

 

Of course it's the EU's objective to avoid a split. It's a wonderful system for the southern states to get all this free money from the North, and it's great for the EU commission since they get to stay on the gravy train, collecting money from member states, paying themselves huge salaries in huge buildings with chauffeur driven cars and social events every night. 

 

Then the responsible countries that are net contributors get a small proportion of the monies paid returned to them and the EU claims they "gave it" to them. What a fantastic system, What's not to like?

[melvinmelvin]

5 hours ago, JonnyF said:

Of course it's the EU's objective to avoid a split. It's a wonderful system for the southern states to get all this free money from the North, and it's great for the EU commission since they get to stay on the gravy train, collecting money from member states, paying themselves huge salaries in huge buildings with chauffeur driven cars and social events every night. 

 

Then the responsible countries that are net contributors get a small proportion of the monies paid returned to them and the EU claims they "gave it" to them. What a fantastic system, What's not to like?

jeeeez

 

some are so far out that they cannot even climb a bar stool . . .

 

blighty need to cut some weirdly good trade deals in order to be able to

cater for all and sundry, including the barstoolo climbing challenged

 

 

[RichardColeman]

14 hours ago, webfact said:

European Union leaders will seek to overcome their differences

Hopefully deciding in which order to walk the plank

[elliss]

6 hours ago, soalbundy said:

..... on its own citizens. That's a joke right? Firstly the UK is up to its neck in debt, higher covid deaths and a higher financial downturn than any other European country and secondly when was the last time that the UK actually did something for its citizens? VAT will be lowered but you can bet that your income tax will go up just like the inheritance tax, road tax and council tax, it's amazing anybody still lives there.

      

       Correct . 

      Pension entitlement , will be extended , to 70 years of age , at least ..

      Count your blessings , not your pounds ...

     

Edited July 17, 2020 by elliss

[cantata]

This entire problem could have been avoided if the Euro had never been created.

[welovesundaysatspace]

52 minutes ago, cantata said:

This entire problem could have been avoided if the Euro had never been created.

So can we just go back to Italian Lira and Greek Drachma to eradicate Covid? Maybe add some bleach to it? 

[cantata]

8 minutes ago, welovesundaysatspace said:

So can we just go back to Italian Lira and Greek Drachma to eradicate Covid? Maybe add some bleach to it? 

I should have been clearer. I meant that if each member of the EU had its own currency, it could have chosen to take whatever stimulus measures it chose to do without waiting for a consensus.

[473geo]

23 hours ago, soalbundy said:

..... on its own citizens. That's a joke right? Firstly the UK is up to its neck in debt, higher covid deaths and a higher financial downturn than any other European country and secondly when was the last time that the UK actually did something for its citizens? VAT will be lowered but you can bet that your income tax will go up just like the inheritance tax, road tax and council tax, it's amazing anybody still lives there.

Towns and cities are becoming giant car parks in the UK, and the selfish motorists block access to pedestrians and cyclists everywhere, government should treble the road tax. Get people back on their feet and off their lard asses. always amuses me people will drive to a gym to exercise, and pay a 40 quid monthly membership fee. They could just cycle/walk/jog there and back, no need to go in, and pay nothing!!

Edited July 18, 2020 by 473geo

[welovesundaysatspace]

1 hour ago, cantata said:

if each member of the EU had its own currency, it could have chosen to take whatever stimulus measures it chose to do without waiting for a consensus.

That’s not true. They don’t need an own currency for that. They can take whatever stimulus measure they want. They don’t need anyone’s consent for it. 

[welovesundaysatspace]

On 7/17/2020 at 6:37 AM, webfact said:

 

Dutch opposition and a threat of a Hungarian veto weigh on chances for a deal on the EU's 2021-27 budget envisaged at slightly above 1 trillion euros and an attached new recovery fund worth 750 billion euros meant to help rebuild the southern economies affected the most by the crisis.

Once again, the Brexiteers’ lies exposed. 
 

EU: Member states decide democratically together and have a veto. 
UK: Member states are vassals of England. 

[cantata]

40 minutes ago, welovesundaysatspace said:

That’s not true. They don’t need an own currency for that. They can take whatever stimulus measure they want. They don’t need anyone’s consent for it. 

Absolutely false. Eurozone rules prohibit members from running deficits above a stipulated level. No eurozone member can issue Euros in echange for debt above the prescribed limit. If what you're saying is, in fact,  the case, then why do they need a unanimous approval for loans? Why do they need any other nation's approval at all?

[welovesundaysatspace]

1 minute ago, cantata said:

Absolutely false. Eurozone rules prohibit members from running deficits above a stipulated level. No eurozone member can issue Euros in echange for debt above the prescribed limit.
If what you're saying is, in fact,  the case, then why do they need a unanimous approval for loans? Why do they need any other nation's approval at all?

You claimed EU member states need an own currency to implement stimulus packages. You also claimed EU member states need consent to implement stimulus packages. Both is not correct. Germany, for example, just implemented a stimulus package. They have the Euro and they didn’t require anyone’s consent for it. 

[cantata]

5 minutes ago, welovesundaysatspace said:

You claimed EU member states need an own currency to implement stimulus packages. You also claimed EU member states need consent to implement stimulus packages. Both is not correct. Germany, for example, just implemented a stimulus package. They have the Euro and they didn’t require anyone’s consent for it. 

Because they didn't exceed their debt limit. Germany can do that since it's been running a budget surplus for many years.

Edited July 18, 2020 by cantata

[welovesundaysatspace]

Just now, cantata said:

Because they didn't exceed their debt limit. Germany can do that since it's been running a surplus for many years.

...which is a different discussion then. I was replying to your claim that stimulus packages require an own currency and/or consent. Which is not the case. 

[cantata]

5 minutes ago, welovesundaysatspace said:

...which is a different discussion then. I was replying to your claim that stimulus packages require an own currency and/or consent. Which is not the case. 

Well the issue is how do the southern Eurozone nations get to stimulate their economies. Being member sof the Eurozone makes them dependent upon the permission of all the other members of EU. If they weren't in the Eurozone, they could go directly to lenders.

[welovesundaysatspace]

2 minutes ago, cantata said:

Well the issue is how do the southern Eurozone nations get to stimulate their economies. Being member sof the Eurozone makes them dependent upon the permission of all the other members of EU.

As I said, that’s not true. See Germany, for example. 

[cantata]

Just now, welovesundaysatspace said:

As I said, that’s not true. See Germany, for example. 

As I pointed out to you, Germany has been accumulating a surplus for years. So they don't have to exceed their deficit limit to spend and stimulate their economy. That's not true for the economically weaker southern nations. What's so hard to understand about that? It's perfectly straightforward.

[welovesundaysatspace]

Just now, cantata said:

As I pointed out to you, Germany has been accumulating a surplus for years. So they don't have to exceed their deficit limit to spend and stimulate their economy. That's not true for the economically weaker southern nations. What's so hard to understand about that? It's perfectly straightforward.

You claimed that stimulus packages require an own currency and consent from other EU member states. It’s not true. Germany doesn’t have an own currency. Germany didn’t seek anyone’s consent for its stimulus package. 
 

 

[robblok]

35 minutes ago, cantata said:

Because they didn't exceed their debt limit. Germany can do that since it's been running a budget surplus for many years.

Correctly something those idiots in the south never seem to be able to do. So its always the northern countries who pay for the mistakes of the south. That gets old and boring. Maybe Italy and Spain and Greece should just leave. 

 

Or maybe they should finally get some fiscal discipline. 

 

Mainly annoyed that the begging countries even dare the ones who are going to have to finance it as cheap. No maners at all no shame at over there. 

Edited July 18, 2020 by robblok

[cantata]

9 minutes ago, robblok said:

Correctly something those idiots in the south never seem to be able to do. So its always the northern countries who pay for the mistakes of the south. That gets old and boring. Maybe Italy and Spain and Greece should just leave. 

 

Or maybe they should finally get some fiscal discipline. 

First off, you might want to revisit the history of this crisis. In Spain and Italy it didn't start with the government. Private books lent money to builders who overbuilt. When the real estate market collapsed, Germany and France, on behalf of the private bankers who foolishly lent to private developers, forced these government to socialize the debt instead of letting those banks go under. Only Greece and Portugal were already in financial trouble before that recession hit.

What you also ignore is how the Euro suppresses these economies. For one thing, because their economy is weak, it keeps the value of the Euro lower than it otherwise would be. This subsidizes exports of the more prosperous nations. ANd not jut exports outside of the EU. Because the poorer nations can't devalue their currency, unlike the case of nations outside the EU, they are at a competitive disadvantage.

And as you clearly don't recall, there was a strong movement within Greece to leave the EU. Germany made sure that didn't happen with very strong threats of economic retaliation. Why do you think that was?

 

[robblok]

2 minutes ago, cantata said:

First off, you might want to revisit the history of this crisis. In Spain and Italy it didn't start with the government. Private books lent money to builders who overbuilt. When the real estate market collapsed, Germany and France, on behalf of the private bankers who foolishly lent to private developers, forced these government to socialize the debt instead of letting those banks go under. Only Greece and Portugal were already in financial trouble before that recession hit.

What you also ignore is how the Euro suppresses these economies. For one thing, because their economy is weak, it keeps the value of the Euro lower than it otherwise would be. This subsidizes exports of the more prosperous nations. ANd not jut exports outside of the EU. Because the poorer nations can't devalue their currency, unlike the case of nations outside the EU, they are at a competitive disadvantage.

And as you clearly don't recall, there was a strong movement within Greece to leave the EU. Germany made sure that didn't happen with very strong threats of economic retaliation. Why do you think that was?

 

First off, you should look at the corruption in those countries with EU subsidies. Then look at how early the people there retire compared to in the countries that pay for it all. 

Paying for debt is normal if you incur a debt you pay for it. Your attitude towards it shows why we would never ever have common debts with those countries as they are just not honorable. So borrowing together is a big no no. 

I do hope they leave we don't need countries that, let them leave. They won't because they know it will damage them and the gravy train is over.

 

Why would we in the north save and be strict for our people when we give it away to countries that retire earlier and are not strict at all. Sorry just no respect anymore for the South. They had chances enough to change they just don't. Its an attitude problem.

 

Germany like the rest of us just wants to see money we borrowed to the south to be returned as it should. That is why there were threats. 

[cantata]

38 minutes ago, welovesundaysatspace said:

You claimed that stimulus packages require an own currency and consent from other EU member states. It’s not true. Germany doesn’t have an own currency. Germany didn’t seek anyone’s consent for its stimulus package. 
 

 

This is such a ridiculous quibble as to be pointless. The problem under discussion is the plight of the poorer southern nations in the Eurozone. They do not have the same recourse to stimulating their economy as do nations outside the Eurozone. They cannot run large deficits to stimulate their economy. They have to get the consent of all the other nations in the EU to borrow funds above what their prescribed budget deficit would allow. 

[welovesundaysatspace]

29 minutes ago, cantata said:

The problem under discussion is the plight of the poorer southern nations in the Eurozone. They do not have the same recourse to stimulating their economy as do nations outside the Eurozone. They cannot run large deficits to stimulate their economy. They have to get the consent of all the other nations in the EU to borrow funds above what their prescribed budget deficit would allow. 

This is a different question. I didn’t comment on this one. I refuted your claim that member states need (1) an own currency, and/or (2) consent for stimulus measures. Both is not the case and I provided an example which proves that your claims are wrong. The fact that some countries have different fundamentals than others doesn’t change that.  

 

 

 

Edited July 18, 2020 by welovesundaysatspace