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The European Commission is proposing a €750 billion recovery fund to reboot economies hit hard by the coronavirus outbreak, EU officials said on Wednesday.
Speaking ahead of the plan's formal presentation, officials said southern countries worst hit by Covid-19 would get the lion's share of the proposed fund, which includes €500 billion in grants and the rest in loans.
The Commision will propose that Italy and Spain — the countries most affected by the epidemic — be awarded €173 billion and €140 billion respectively through a mix of grants and loans, the officials said.
Paolo Gentiloni, the EU economic affairs commissioner, hailed the proposal as a "European breakthrough", tweeting that the fund would help "tackle an unprecedented crisis".
European Commission President Ursula von der Leyen argued that this stimulus package would prevent the need for more costly damage-control measures later on: "Tomorrow the cost of inaction in this crisis will be far more expensive for us. The point here is to lay the foundations for our future together," she said. "Let us put aside the old prejudices!"
Commissione propone un Fondo di Recovery da 750 miliardi che si aggiunge agli strumenti comuni già varati. Una svolta europea per fronteggiare una crisi senza precedenti. #NextGenerationEu
— Paolo Gentiloni (@PaoloGentiloni) May 27, 2020
The aim is to protect the European Union's single market of 450 million people from being splintered by divergent economic growth and wealth levels as the 27-nation bloc emerges from its deepest ever recession expected this year.
The plan's advocates say its is necessary because countries such as Italy, Spain, Greece, France and Portugal, burdened with high debt and heavily reliant on tourism, will find it more difficult than more frugal northern nations to restart their economies through borrowing. Thanks to the euro, it is impossible for these countries to boost their competitiveness by devaluing their currencies, as was often the case during economic troubles in the post-war era.