EU to kick off pandemic plan with €10bn bond issue: French minister

French minister for European Affairs Clement Beaune speaks during a joint press statement with Austrian European affairs and Constitution Minister Karoline Edtstadler (unseen) at the Austrian Chancellery in Vienna, Austria, 09 November 2020. Beaune is on a one day work visit in Vienna. [EPA-EFE/FLORIAN WIESER]

The European Union plans to kick off its €750 billion pandemic recovery package with an initial €10 billion bond issue, France’s junior minister for European affairs, Clément Beaune, said on Monday (31 May).

In an interview with French financial daily Les Echos, Beaune also said that more than €100 billion would be injected into the European economy from this year.

Beaune said the European Commission would launch the debt issuance process on June 1 by calling on big European and international banks, and the securities would be issued in June.

“The market appetite should be very major and the interest rates very favourable,” he told Les Echos.

Commission to start borrowing recovery funds in June

The European Commission confirmed on Monday (31 May) that it will start borrowing the €800 billion needed to finance the recovery fund in June, after all member states gave their approval to the issuance of EU debt which is on an unprecedented scale.

Asked whether the new bonds would be called corona-bonds, he said “let’s avoid this radioactive term”, and added that with the recovery package an embryonic European Union treasury was taking shape.

Proceeds of the issue would be spent from July onwards and by the end of the year Europe will inject more than €100 billion into its economy to finance the recovery of its member states, he said.

Asked about a G7 initiative for a minimum corporate tax rate of 15%, he said that within the European Union, Ireland was the most hostile to the principle of a minimum tax and taxation of internet companies, and to a lesser degree Cyprus and Malta.

He added that the Netherlands was not opposed to the principle but will be demanding about its implementation.

“The European Union is blocked because of the unanimity rule. When there is a legal blockage, we need a political battle … given the U.S. position and the global agreement that we hope for in July, this will put a lot of political pressure on the reticent member states,” he said.

European recovery gains speed as COVID-19 fund kicks in

Europe’s economic recovery from the impact of COVID-19 is gaining momentum, the European Commission concluded in an economic forecast presented on Wednesday (12 May), with the rebound credited to the recovery fund, vaccines, global trade and the lifting of lockdowns. 

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