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Merkel and Macron make a stunning coronavirus proposal on EU pandemic fund

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  1. patience_limited
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    From the article: This is a tectonic shift in policy. Better-off EU nations are acknowledging that austerity policies for the less well-off and most affected will not work to address widespread...

    From the article:

    Throughout the pandemic, euro zone governments have lagged behind the European Central Bank in charting a path out of the economic crisis. Germany and France have suddenly decided they want to lead the way.

    Chancellor Angela Merkel and President Emmanuel Macron have tabled a joint plan that includes, among other items, a shared 500 billion-euro ($543 billion) “recovery fund” for the EU. Berlin and Paris are front-running the European Commission, which is meant to present its own proposal for the fund next week. The two leaders are sending a clear signal to the more hawkish euro area members — such as the Netherlands and Austria — that the worst-affected nations need more than financial wizardry to get through this emergency.

    The Franco-German proposal would see the Commission raising the money on the financial markets and then distributing it in the form of grants. This would be a remarkable change for the EU, whose response so far has been that each country should take on more debt individually. In Merkel’s and Macron’s plan, each member of the bloc will contribute depending on its share of the EU budget, which in turn hinges on the relative size of national incomes. But the Commission would disburse the money as it saw fit. Essentially, this clears the way for fiscal transfers from financially secure countries to those less fortunate — and is a tacit admission that Europe needs to make a statement about all being in it together on Covid-19.

    This is a tectonic shift in policy. Better-off EU nations are acknowledging that austerity policies for the less well-off and most affected will not work to address widespread economic disorder during the pandemic, and continued neglect won't help the euro zone recover.

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