France and Germany’s new €500 billion economic recovery plan for the European Union has been rejected by several member states.
The four EU countries that have opposed such a rescue fund have a different idea on how to go about saving the European Union from economic hardship following the pandemic.
Often named as ‘The Frugal Four’, Austria, Sweden, Denmark and the Netherlands want to put forward a counterproposal as they see the new initiative by the EU’s two biggest economies as debt sharing.
The 4 countries instead want to fund a recovery through the EU budget along with loans to the countries most seriously impacted by the pandemic. Fiscally conservative states have long opposed the idea of pooling the debt of other eurozone member states that are in worse financial shape. The issue has been particularly toxic politically as the idea of one country paying for the debt of the other has been rejected by people in many political parties.
However, despite the differences there is movement towards a recovery fund in the form of emergency aid, and there is willingness for the countries to come up with a solution so that member states can access much needed funding as quickly as possible.
For now, we will have to see what mechanism and approach the EU will choose to secure the longterm stability of the project.