Member states of the European Union have agreed a €750 billion recovery fund in the wake of the coronavirus pandemic, which has all but destroyed large parts of the economy in many countries.
The agreement was reached during a four-day summit meeting in Brussels, Belgium between the leaders of the 27 member nations.
Charles Michel, chairman of the summit, called the accord “a pivotal moment for Europe”, according to a report by Reuters.
He added: “This agreement sends a concrete signal that Europe is a force for action.”
The deal has been nicknamed “Next Generation EU”, and basically requires the borrowing of €750 billion form the financial, or “capital”, markets.
Some €390 billion of the total sum will be given to companies and organisations as grants, and how the money would be distributed was “among the most contentious topics at the summit”, according to the Financial Times.
In the end, the solution was to allow any member state to raise objections to decisions about the awarding of money, says the FT.
In the weeks preceding the summit, the EU had adopted a “Capital Markets Recovery Package” as part of its overall coronavirus recovery strategy.
The intention was to make it easier for capital markets to support European businesses to recover from the coronavirus crisis.
The “Banking Package”, which was an earlier form of the Capital Markets Recovery Package, proposes targeted changes to capital market rules, which will encourage greater investments in the economy, allow for the rapid re-capitalisation of companies and increase banks’ capacity to finance the recovery.
Valdis Dombrovskis is a Latvian politician appointed by EU president Ursula von der Leyen as the executive vice president of the European Commission for An Economy that Works for People, the European Commission being the administrative arm of the EU.
Dombrovskis said: “We are continuing with our efforts to help EU citizens and businesses during the coronavirus crisis and the subsequent recovery.
“One way of doing so is to help businesses raise capital on public markets. Today’s targeted amendments will make it easier for our businesses to get the funding they need and to invest in our economy.
“Capital markets are vital to the recovery, because public financing alone will not be enough to get our economies back on track. We will present a wider Capital Markets Union Action Plan in September.”