Fractious Week For EU Despite €500 Billion Rescue Package

As the Covid-19 epidemic spreads further across the European Union, as do the growing fractions between its member states.

A €500 billion rescue fund was announced late last Thursday following a week of intense negotiations between all 19 countries that use the single currency. This fell short of the €1.5 trillion recommended by the European Central Bank, primarily due to disagreements on what terms funds should be distributed under.

Those countries hardest hit by the devastating economic effects of Covid-19, including France, Italy and Spain, have requested the issue of special bonds dubbed “coronabonds”. Similar to the mutualised debt created during the 2008 financial crisis, the bonds would require all EU member states to borrow from the markets under the same terms.

Countries with a reputation for frugality, including Germany, the Netherlands and Austria, opposed such a policy as it would leave them liable for the debts of others whilst simultaneously make borrowing more expensive for themselves. Politicians also warned that anti-EU sentiment could grow within the wealthier member states if the electorate perceived that their money was being misspent.

Now at loggerheads, finance ministers will resume negotiations via tele-conference later today in the hope of unlocking more funds. Along with the thorny issue of bonds, emergency credit lines and a €100 billion job support programme are also expected to be discussed.