France warns against slow rollout of EU recovery fund

By Leigh Thomas and Sabine Siebold

PARIS (Reuters) - France warned on Tuesday that the European Union risked falling behind the United States and China if it loses more time rolling out its 750 billion euro recovery plan.

French Finance Minister Bruno Le Maire issued the warning as he and his German counterpart presented plans to tap the recovery fund - agreed by EU leaders last July - for nearly 70 billion euros ($85 billion) to jump-start their post-pandemic economic rebounds.

"Let's be clear: we were very efficient last year in the adoption of the European Recovery Plan and on the decision on common debt issuance," Le Maire said in an online news conference with German Finance Minister Olaf Scholz.

"Since then, we have lost too much time. China has resumed its growth. The U.S. is booming. The EU must remain in the race," he said.

Europe is already suffering from a slow start to its vaccination programme, which has lagged behind the United States.

EU governments are supposed to detail by the end of the week how they plan to spend grants and loans from the recovery fund, which will be financed by joint borrowing by the bloc.

The need for long-term planning and reforms, while also meeting requirements that 37% of the EU money goes to fighting climate change and 20% to digitalising the economy, means some countries will not get their payout requests in before mid-May.

The relatively small size of the EU stimulus and the length of time it is taking to launch have invited unflattering comparisons with the Biden administration's multi-trillion package.

Le Maire said such comparisons were "unfair and inadequate" because Europeans had benefited from stronger welfare policies during the crisis.

Before considering whether to increase the European response, Europe needed to focus on implementing the recovery plan as it stands, he said.

Scholz added: "I am really confident that we are working with a very strong programme that makes the difference and is very good on the global scale".

STIMULUS ROLLOUT

France did not wait for the European plan to get off the ground and last September launched its own 100 billion euro stimulus plan, of which it has already spent 30 billion euros.

While Paris has charged ahead, it has grown frustrated that other countries have dragged their feet ratifying the EU recovery plan, risking a slow start to a disbursement of funds.

Le Maire urged other member states to submit their plans and ratify "as soon as possible" national legislation needed to finance the EU fund.

If the European Commission analysed national investment plans quickly, member states could jointly sign off on them by July, paving the way for payouts "before the end of the summer", Le Maire said, adding he expected a first instalment of 5 billion euros in September "at the latest".

France is counting on receiving a total of 41 billion euros from the fund to finance its national stimulus programme while Germany expects to get grants worth 25.6 billion euros.

How much money countries get is not only based on the size of their economies, but how hard they were hit by the crisis.

Germany will spend 90% of its share on climate protection and digitalization while France has earmarked 75% for such projects, well in excess of EU requirements.

The EU fund could boost the bloc's growth by between 1.5% and 4.1% over five years and support the credit ratings of some of its most indebted states, ratings agency S&P Global said.

(Reporting by Leigh Thomas in Paris and Sabine Siebold in Berlin, additional reporting by Holger Hansen in Berlin, editing by Giles Elgood)