EU Mulls over France’s Offer to Fuel Growth with more Debt

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Paris offered European Commission to issue bonds in order to finance the European Union Recovery Fund. Proposed pace of the issue – 150-300 billion euros per year conducted through the period of 2021-23. “The size should be at least 1-2% of EU GNI per year over the next three years, which will provide the EU budget with extra funds of 150-300 billion euros per year between 2021 and 2023,” the French document says.

EU discusses how to support economic growth after recession due to coronavirus. The European Commission should make an official proposal for a new joint budget for all 27 participating countries for 2021-27 and an associated recovery fund over the course of May 18th week.

“Loans provided to member countries could help fill spending gaps, but they should remain as addition to grants. To ensure maximum efficiency, such loans should have a grace period, a very long repayment period and a low interest rate … It’s also very important, so that this fund is established as soon as possible, possibly before the next long-term budget plan comes into force”.

The main implication for this move – possible upside in EU equities, especially if the EU commission will accept this solution.

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