FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, February 19, 2020. REUTERS/Yves Herman/File Photo
BRUSSELS (Reuters) – European Union leaders meeting via videocall on Thursday are not expected to make any final decisions on exactly how to finance economic recovery from the coronavirus pandemic, diplomats and officials told Reuters.
During a preparatory discussion with EU national envoys on Monday, the bloc’s executive estimated the global outbreak could wipe off as much as a tenth of the continent’s economic output.
The Executive Commission told the 27 member states’ envoys that it wanted to finance a new recovery fund via increased so-called headroom in the bloc’s next joint budget, the sources said on Tuesday.
The sources participated in the discussion behind closed doors, or were briefed on it.
While the budget covers 2021-27, the Commission would ask for a temporary increase for 2021-22 of guarantees by member states for the EU budget’s “own resources” and thus the head room to allow the Brussels-based executive to raise more cash against that.
Countries such as Austria, Germany, the Netherlands and Sweden, part of the fiscally conservative north that has so far firmly held out against any form of debt mutualization in the EU, told the gathering such a recovery fund must be temporary.
Reporting by Gabriela Baczynska and Francesco Guarascio; Editing by Clarence Fernandez