April 24, 2020

European Council moves towards more burden sharing but refrains from steps towards debt mutualisation

Share on facebook
Share on twitter
Share on linkedin
Share on email

In Short

European Council confirmed Eurogroup package: At yesterday’s meeting the European Council unsurprisingly passed the € 540 bn aid package already negotiated by the Eurogroup before. It shall become operational on June 1.
European Council moves towards more burden sharing but refrains from steps towards debt mutualisation
Share on facebook
Share on twitter
Share on linkedin
Share on email
  • At yesterday’s European Council meeting the head of States unsurprisingly passed the € 540 bn package proposed by the Eurogroup. It shall become operational on June 1.
  • Moreover, there was agreement to establish a recovery fund as part of the new European budget (MFF). The European Commission was asked to work on details.
  • Key questions were left unsolved, however, such as the size of the recovery fund and whether it shall provide loans or grants. A typical European compromise containing both elements seems most likely to us.
  • In the days before the meeting Italy softened its call for “coronabonds” and its opposition to ESM loans. The solution found yesterday strengthens the role of the Commission, possibly reducing the impact of the widely diverging positions among member states. It makes it more likely that Italy will take up ESM credit lines.
  • While moving in the right direction the lack of details will not relief investors soon.
EUROPEAN COUNCIL MOVES TOWARDS MORE BURDEN SHARING BUT REFRAINS FROM STEPS TOWARDS DEBT MUTUALISATION

Also interesting

size 3
July 29, 2021
Market Commentary

COVID-19 UPDATE Facts & Figures – 29/07/2021

federal-reserve-building-with-twenty-dollar-bill-on-grunge-texture-picture-id175716236
July 28, 2021
Market Commentary

MARKET COMMENTARY – The Fed: the recovery is on track, tapering is approaching

EU flag green
July 26, 2021
Focal Point

ECB greening of the credit market to start in 2022