Four days and nights of negotiations, 91.5 hours, 27 heads of state and government – and finally a compromise on how to proceed in Europe. The result of the negotiations: an EU budget of 1.8 trillion. With a Corona aid program of 750 billion euros.
The European Council’s special summit, which was supposed to end on Saturday, had been extended due to two issues in particular: the amount of the subsidies in the Corona package and the linking of EU funds to compliance with the rule of law. The country heads reached a preliminary agreement on Monday evening, and the “deal” has been official since Tuesday morning, as Council President Charles Michel tweeted.
– Charles Michel (@eucopresident) July 21, 2020
Personal-Financial.com has summarized in five numbers what the reconstruction fund and the multi-billion euro financial framework look like and what they contain.
390 billion euros in grants in the reconstruction fund
Even in the original draft, which the EU Commission presented at the end of May, the Corona aid program should be 750 billion euros. Two thirds of the money should go to the affected member states as non-repayable grants, one third in the form of loans. However, this relationship was too generous for the frugal states, including the Netherlands, Austria, Sweden and Denmark. In the final compromise on the Corona program, the grants amount to EUR 390 billion, EUR 312.5 billion go directly to government investments and reforms, the rest is distributed through various programs. The loans amount to 360 billion euros.
1074.3 billion euros for the budget
The budget was also EUR 26 billion smaller than in May. Instead of 1.1 bio. The seven-year financial framework from 2021 to 2027 now amounts to 1,074.3 billion euros. Around a third of the funds are earmarked for agricultural subsidies and support for disadvantaged regions.
However, the two key objectives of the new budget, climate policy and digitalization, had to fall apart in the negotiations. The climate neutrality program, the “Just Transition Fund”, shrank to just under a quarter and most recently comprised EUR 10 billion. The Horizon Europe research program also ended up with five billion euros instead of the originally planned 13.5 billion euros. The “Digital Europe Program”, which was supposed to drive digitization within Europe, recently amounted to around 6.8 billion euros – a decrease of almost a fifth.
Around € 3.7 billion net payer discount for Germany
The reason for the savings was a compromise on contributions to the budget – especially in favor of the frugal states. As a net contributor, you should get higher discounts on your annual contributions to the new household. The Netherlands will receive a discount of EUR 1.92 billion – an increase of EUR 345 million over the previous proposal. With 565 million euros, Austria gets more than twice as much discount as before. Germany also receives a discount on its contribution, although it remains unchanged at EUR 3.67 billion a year.
650 million euros for East German regions
Germany benefits from this in another place: the new budget also provides for a special payment for eastern German regions. Around EUR 650 million is to go from the European Structural Funds to so-called transition regions. The money should flow there into economic development and above all strengthen competitiveness, economic growth and employment. Some other EU countries also receive support from the fund, including Belgium with EUR 200 million and the Czech Republic with EUR 1.56 billion.
New source of income planned: 80 cents per kilo of plastic waste
The EU Commission is expected to borrow money on the financial markets for the Corona Reconstruction Fund. The debts raised are to be repaid by 2058. To facilitate repayment, the final compromise also provides some new sources of income for the Commission. A plastic levy of 80 cents for every kilo of non-recycled plastic waste is expected to come in January 2021. After that, the Commission also plans to make further proposals on CO2ndCompensation mechanism for taxing goods imports according to the CO incurred2nd– make emissions and a digital tax and set them in motion by 2023.
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