Monday

5th Dec 2022

Merkel: Budget-recovery deal must come in summer

  • Commission chief Ursula von der Leyen (l) and German chancellor Angela Merkel held a joint press conference over video (Photo: European Commission)

German chancellor Angela Merkel, on Thursday (2 July), urged EU leaders to reach agreement on the bloc's long-term budget and the recovery fund, saying Europe was facing the most difficult situation in its history.

"We are aware of some of the difficulties, we very much hope it will be possible to reach an agreement in the course of this month," Merkel said at a press conference in Berlin marking the start of Germany's six-month EU presidency.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"There has to be an agreement during the summer, I can't imagine another outcome," she said.

EU leaders gather - for the first time in person since the coronavirus crisis - in Brussels on 17-18 July to bridge the deep differences over the EU Commission's proposed €1.1 trillion budget and €750bn recovery fund.

European Council president Charles Michel is expected to put forward his compromise proposal late next week.

"We all know that the answer to this unprecedented crisis has to be a very powerful one, it has to make a real difference," Merkel said.

Commission president Ursula von der Leyen, joining the press conference from Brussels, said that EU leaders understood that the crisis needed an unprecedented answer.

She added that they had already agreed the commission could raise money to hand out to member states to tackle the dire economic consequences of Covid-19.

EU leaders are, however, divided on the overall size of the package, the conditions attached to it, and methods of distribution.

Fiscally conservative countries, led by the Netherlands, want to see a smaller package with strict and targeted conditions, paid out in loans rather than non-repayable grants.

Southern countries would like to see massive help in grants, which would not add to their public debt pile, while some eastern countries are worried about their traditional EU subsidies.

In an effort to gain the support of the so-called "Frugal Four" countries, Michel is reportedly panning to put forward a slightly smaller budget to leaders, but will not lower the size of the recovery fund.

The Belgian politician also plans to propose that 30 percent will be distributed from the fund only from 2023, depending on the depth of the recession in each country over the next two years, Bloomberg reported.

Merkel faces big expectations to deliver a breakthrough on the recovery fund and the 2021-2027 budget, herself admitting that there is a psychological element in making sure European help to countries most hit by the crisis can be agreed as soon as possible.

Macron and Merkel propose €500bn EU recovery fund

German chancellor Angela Merkel and French president Emmanuel Macron proposed on Monday a recovery fund of €500bn to support the sectors and regions in the EU most affected by the coronavirus crisis.

EU leaders to reconvene in July on budget and recovery

Most EU leaders want an agreement before the summer break, but the Dutch PM, leading the 'Frugal Four', warned there might not even be a deal then. But the ECB's Christian Lagarde has warned of a "dramatic" economic fall.

Analysis

EU Commission's €1.85trn recovery package - key points

With an eye-watering over a trillion euro revised budget and a €750bn recovery package, the EU Commission hopes to restart Europe's economy. Here are some of the key aspects of the proposals.

Agenda

EU 'in-person' summit plus key data privacy ruling This WEEK

EU leaders will meet in Brussels on Friday and Saturday to discuss in person the EU's long-term budget and recovery plan to respond to the crisis. Meanwhile, the future of the EU-US Privacy Shield might depend on this week's ruling.

Agenda

Budget talks shift gear This WEEK

European Council president Charles Michel is expected to present his compromise proposal on the EU's long-term budget and the recovery fund to national capitals in the second half of the week.

Portugal was poised to scrap 'Golden Visas' - why didn't it?

Over the last 10 years, Portugal has given 1,470 golden visas to people originating from countries whose tax-transparency practices the EU finds problematic. But unlike common practice in other EU states with similar programmes, Portugal has not implemented "due diligence".

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. Hungary's funds showdown in focus This WEEK
  2. EU must break Orbán's veto on a tax rate for multinationals
  3. Belarus dictator's family loves EU luxuries, flight data shows
  4. How Berlin and Paris sold-out the EU corporate due diligence law
  5. Turkey's EU-funded detention centres ripe with abuse: NGO
  6. In green subsidy race, EU should not imitate US
  7. EU Commission proposes suspending billions to Hungary
  8. EU: Russian assets to be returned in case of peace treaty

Join EUobserver

Support quality EU news

Join us