ESM chief: Europe needs at least €500 billion from EU institutions for recovery

Klaus Regling, Managing Director of the European Stability Mechanism (ESM) attends a press conference following an Economic and Financial Affairs Council (ECOFIN) at the European Council in Brussels, Belgium, 5 December 2019. [Staphanie Lecocq/EPA/EFE]

Europe will need at least another €500 billion from European Union institutions to finance its economic recovery after the coronavirus pandemic, on top of the agreed half-a-trillion package, the head of the euro zone bailout fund said.

In an interview with Italy’s Corriere della Sera paper, published on Sunday (19 April), European Stability Mechanism Managing Director Klaus Regling said the easiest way to organise such funds would be via the European Commission and the EU budget.

“I would say that for the second phase we need at least another €500 billion from the European institutions, but it could be more,” Regling told the paper.

“For that, we need to discuss new instruments with an open mind, but also use the existing institutions, because it is easier, including in particular the Commission and the EU budget. Rethinking European funds can go a long way in keeping the European Union together,” Regling said.

European Union finance ministers agreed on 9 April on safety nets for sovereigns, companies and individuals worth in total €540 billion.

Eurogroup agrees on €540 billion corona-package

The Eurogroup finally agreed on a €500 billion package to support member states, companies and workers in the coronavirus crisis, after The Netherlands and Italy overcame they differences. Leaders will discuss in the coming days the recovery plan and the possibility of ‘coronabonds’.

They also agreed that the euro zone, which the IMF predicts will plunge into a 7.5% recession this year because of the pandemic, will need money to recover, but they had different ideas on how much is needed and how to raise it.

EU leaders are to discuss that at a videconference on 23 April. The idea around which a compromise may emerge is likely to involve the European Commission borrowing on the market against the security of the long-term EU budget and leveraging the money to achieve a bigger effect.

Subscribe to our newsletters

Subscribe
Contribute