Spain and EU Commissioners call for common European debt instruments

A handout picture made available by the Spanish Government shows Prime Minister Pedro Sanchez, during his meeting with regional presidents via video-conference at Moncloa Presidential Palace in Madrid, Spain, 5 April 2020. [Handout photo/EPA/EFE]

Europe needs debt mutualisation and a common Marshall plan to recover from the coronavirus pandemic, Spanish Prime Minister Pedro Sánchez told German newspaper Frankfurter Allgemeine Zeitung.

EU leaders have tasked policymakers with finding a new way to finance a recovery from the COVID-19 outbreak, after Germany and the Netherlands ruled out calls from France, Italy, Spain to create a common debt instrument.

Leaders clash over stimulus against pandemic, pass hot potato to Eurogroup

EU leaders on Thursday (26 March) continued to disagree over the economic response to the coronavirus as Northern countries rejected the idea of issuing joint debt, known as “corona bonds”, proposed by nine member states to finance the recovery.

Germany, among other nations, has long been opposed to issuing common debt with other European nations, arguing that it would stop individual countries from pursuing structural reforms and balancing their budgets.

Sánchez echoed the remarks of European Commission President Ursula von der Leyen who on Thursday called for a new EU budget in the form of a “Marshall Plan” to help drive Europe’s recovery from the coronavirus crisis.

Von der Leyen: EU budget should be the Marshall plan we lay out together

The EU’s next long-term budget should be a key instrument in the recovery plan to confront the huge economic consequences of the COVID-19 crisis, European Commission President Ursula von der Leyen said on Thursday (2 April).

The Marshall Plan was an aid programme initiated by the United States in 1948 to help countries in Western Europe recover after World War Two.

In the medium term, Europe needs a “new mechanism for debt mutualisation”, Sánchez also told the newspaper. “If the virus doesn’t stop at borders, then financing mechanisms cannot do so either,” he said.

Separately, the European Union’s Internal Market Commissioner Thierry Breton, and European Economics Commissioner Paolo Gentiloni, told Frankfurter Allgemeine Zeitung that Europe needed to create a European taxpayer fund which could then issue long-term bonds to pay for a recovery from the pandemic.

Subscribe to our newsletters

Subscribe
Contribute