The European Commission on Wednesday unveiled a huge €750bn (£657bn) coronavirus recovery plan, pledging to disburse hundreds of billions to the countries worst affected by the pandemic.
Italy and Spain would receive more than €300bn in grants and loans as part of the package, called Next Generation EU.
“To protect lives and livelihoods, repair the single market, as well as to build a lasting and prosperous recovery, the European Commission is proposing to harness the full potential of the EU budget,” the commission said.
“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future,” commission president Ursula von der Leyen said.
The unveiling of the plan comes shortly after European Central Bank president Christine Lagarde warned that the eurozone’s economic output was likely to fall by between 8% and 12% in 2020.
The notion of issuing grants, rather than loans, to EU countries struggling from the pandemic is a contentious one.
France and Germany last week paved the way for the issuance of the former, arguing that the commission should be authorised to borrow on the financial markets for the grants.
It marked the first time Germany has supported the idea of joint borrowing across the bloc, known as debt mutualisation.
Meanwhile Austria, the Netherlands, Denmark, and Sweden have warned that they will only support an emergency fund made up of loans.
The €750bn in grants and loans comes on top of the EU’s ordinary long-term budget, which will run until 2027.
In total, the recovery plan amounts to €1.85tn, the commission said, noting that it would help “kick-start” the bloc’s economy and ensure that Europe “bounces forward.”