European recovery fund makes more sense outside EU budget: France

European recovery fund makes more sense outside EU budget: France

© Reuters. French Economy and Finance Minister Bruno Le Maire at the Bercy Finance Ministry in Paris

PARIS (Reuters) – France suggested on Tuesday that a proposed European recovery fund would be more effective if it stands apart from the EU budget, even though that might be hard to stomach for some member countries such as Germany.

French Finance Minister Bruno Le Maire has sought to ease opposition in some northern countries such as Germany and the Netherlands to the joint issue of debt by proposing a temporary European recovery fund strictly focused on future investments.

While France is open to the idea of creating the fund within the EU’s budget, Le Maire said on Tuesday that it would be more effective if it was set up as a standalone special purpose vehicle.

“The standalone option merits being considered in its details because it seems to us to be more effective for raising debt quickly,” Le Maire told journalists on a conference call.

“It has the merit of clarity by making a distinction between post-crisis recovery financing and financing the EU’s current expenditures,” he added.

German Chancellor Angela Merkel indicated on Monday willingness to finance economic recovery through a bigger European Union budget and the issuance of joint debt via the European Commission.

EU leaders are due to discuss how to finance the recovery when they meet by videolink on Thursday, although diplomats and officials say they are unlikely to make any decisions during the talks given persistent divisions.

France wants the fund to be used to raise up to a trillion euros with its borrowing guaranteed by all EU countries depending on the size of their economies. Germany, the Netherlands, Austria, Denmark and Finland, however, have previously cautioned against the idea of joint borrowing.

While housing the fund within the EU budget could ease the concerns of countries wary of joint borrowing, it could create pressure to divert spending away from existing programmes, reducing its boost to the economy.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Latest Category Posts

You May Also Read