Brussels ready to support the first wave of the EU 800 billion euro epidemic recovery fund

Brussels intends to sign the first of the national recovery programs, which hopes to revive the epidemic-stricken economy of Europe. Officials on Wednesday are ready to give the green light to historic spending proposals from Spain and Portugal.

800 billion euros The next generation of EU The fund, agreed last year, is a bet that priorities such as energy transitions and large-scale spending could prevent the bloc from repeating the effects of the 2008 global financial crisis, when it was lagging behind the United States in its recovery.

The fate of the project will be decided mainly as a result of the activities of large beneficiaries, such as: Spain:, which suffered the biggest drop last year due to the Covid-19 crisis. In 2020, the Spanish economy has shrunk by 10.8%; it is planned to receive about 70 billion euros in grants and 70 billion euros in loans in 2021-2026. Portugal forecasts access to € 14 billion in € 6 2.6 billion in grants.

Italy will be the largest beneficiary of the next generation fund, in the coming days the European Commission will sign 191.5 billion euros in loans and grants.

As a condition of borrowing money, all national programs should indicate how EU funds will be used for the Alliance’s further goals of digitalization, reducing carbon emissions, while committing members to large-scale reforms. Observers warn that the implementation of the programs is testing member states.

“Implementation is possible,” said Guntram Wolf, director of the Bruegel Research Center. He said that many of the restoration programs outlined by the EU states were impressive, but he warned. “You have to do them at the end of the day, it means overcoming some internal resistance. That’s a challenge. ”

Commission chairwoman Ursula von der Leyen will travel to Lisbon and Madrid on Wednesday to celebrate the approval of their plans to pay a series of visits to EU capitals as Brussels signs proposals in the coming weeks. The final support will be provided by EU member states this summer.

The commission predicts that all members of the eurozone will recover from pre-crisis output by the end of next year, supported by recovery spending after the issuance of the 6.6% single currency area in 2020.

But the Madrid restoration plan is deeply controversial in Spain. The Socialist-led minority government prime minister, Pedro Sanchez, who is in the polls, hopes that the “mix of reforms will create 800,000 jobs” will add 2 percentage points a year to the gross domestic product over the life of the program. He likens the impact of the transformation to the entry into Spain of the then European Community and the creation of a single EU market.

Spanish Deputy Prime Minister Carmen Calvo leaves, says EU funds will make Spain a ‘trendy country’ © Juan Carlos Hidalgo / EPA-EFE / Shutterstock

“We will be able to locate our country, which is already the fourth largest economy in the EU, where it deserves to be developed in terms of competitiveness. “, a modern country” Carmen CalvoThe Deputy Prime Minister told the Financial Times in a recent interview.

One of Madrid’s goals is to enable 75% of Spaniards to have 5G internet coverage by 2025, to put ,000 250,000 electric vehicles on the road by 2023, bringing the total to 5 million by 2030.

The government is also seeking permission from EU state aid regulators to make a new investment of 3 to 4 billion euros. battery cell factory to promote machine building.

Opponents, however, accuse the government of oversupply of EU funds, a reform agenda that is too cautious about Spain’s biggest structural challenges, including the pension system, the budget deficit, and the labor market.

Center People’s Party leader, center-right opposition Pablo Kazado recently told the FT that the program could lead to huge waste.

“Any project that has not been funded by the bank so far cannot be funded by a European taxpayer,” he said. “Businesses put unprofitable projects on the shelf.”

He said Spain’s economic future depended not on funding for projects such as the battery plant, but on “reorganizing the national economy”.

The government says it has outlined 102 reforms in its recovery plan, but the progress of the pensions’s labor market depends on negotiations with business and trade unions, while fiscal reforms will have to wait for an expert report next February.

While Sanchez will chair the committee overseeing the development and implementation of the rehabilitation plan, his government insists that most of the resources will be spent by the governors and others.

According to the 70 billion euro grant offered by Madrid, 40% will be spent on energy կանաչ other green projects, 30% on digitalization, 10% on education և training, և 7% on research և development. ,

Fabian ule Uleg, executive director of the Center for European Policy Research, questioned whether the EU’s response to the crisis would eventually be sufficient. But he said the bloc deserved credit for giving a collective response to the epidemic so as not to repeat its heartbreaking response to the economic crisis of a decade ago.

“From the beginning, there was a feeling that we should address it together,” he added.

Additional report by Peter Wise in Lisbon

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