EU finance ministers have approved a plan to spend €540 billion on new measures to address economic constraints amid the coronavirus (COVID-19) pandemic, which is projected to shrink Eurozone output by up to 10% in 2020. The “rescue pact” includes a €100 billion loan plan for unemployment benefits, €200 billion in loans for smaller businesses, and access to €240 billion in loans for eurozone countries to draw on from the bloc’s bailout fund. The plan must still be approved by EU leaders.
The two countries hardest hit by the COVID-19 pandemic, Italy and Spain, called for a joint pooling of EU debt and the unprecedented use of joint bonds in order to keep borrowing costs down for some states. However, other member states including Germany and the Netherlands opposed this move in favor of more restrictions over how the money could be used, arguing that joint bonds would raise borrowing costs in wealthier countries and fuel anti-EU sentiment. When negotiations were completed, the joint bonds were not approved, and funding has been limited to health-related programs.
