EU crisis: Merkel and Macron’s plan derailed amid furious Brussels revolt over COVID-19

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German Chancellor Angela Merkel and French President Emmanuel Macron plan for the European Commission, the EU executive, is to borrow €500billion (£448billion) as common debt and transfer it to the regions and industries hit hardest. But four states have opposed the proposal and said strict conditions should be attached to the grant. Euronews’ Isabell Kumar asked reporter Jack Parrock for more details: “Franco-German plans look like they’ve been derailed but what are the so-called frugal four proposing instead?”

Mr Parrock said: “What the leaders of Austria, Sweden, the Netherlands and Denmark are saying essentially is the fund that gets put into the budget to try and help Europe with economic recovery from COVID-19, that instead of being grants there should actually be strict conditions on them.

“The Dutch Prime Minister, Mark Rutte, said that countries like, Italy and Spain which have been hard hit by the pandemic but also have high national debt should be forced to take on reforms if they take money from this pot.

“The €500billion fund that was proposed by Emmanuel Macron and Angela Macron was supposed to be a mutualised pot of debt.

“It meant that everyone shouldered the burden together.

“It was seen as a big step for the Germans who had been really reluctant to do that.

“But now it looks like even though the Germans are on board, these four countries are really going to put a stick in the mud on it.”

Ms Merkel had opposed a proposal by French President Emmanuel Macron for a Recovery Fund that would, for the first time, bind all 27 member states to raise debt jointly.

Diplomats in Brussels, Paris and Berlin familiar with the discussions said Ms Merkel had dropped Germany’s long-held opposition to mutualising debt to fund other member states – when it became clear the EU itself was in peril.

The court ruling in effect put the onus on EU governments themselves to fund any fiscal response.

European leaders agree that, if they fail to rescue economies now in freefall, they risk something worse than the debt crisis 10 years ago – which exposed faultlines, fanned Euroscepticism and almost blew up the eurozone.

The pandemic has derailed the recovery of the EU’s most indebted countries. Italy’s debt is shooting towards 170 percent of national output, Greece is losing gains wrung from years of belt-tightening and, across the south, a collapse in tourism threatens millions of jobs.

But members’ initial slowness to share medical equipment, and readiness to close their borders, seemed to demonstrate Brussels’ irrelevance when national interests are at stake.


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Divisions erupted at an all-night videoconference of EU leaders on March 27 as fiscally conservative northern countries resisted pressure from a “Club Med” group to raise a splurge of mutual EU debt to tackle the effects of the pandemic.

Finance ministers agreed on April 9 to an EU-wide rescue plan worth half a trillion euros, but it was too little to fund long-term recovery, and the feud festered on. Berlin insisted any recovery plan must consist of short-term, repayable loans.

An EU official familiar with Macron and Merkel’s consultations with the Commission said: “Merkel became increasingly aware that it was making Europe look really bad.”

It may also boost Macron’s standing and his vision of more integration as Merkel ends her long tenure.

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