AN ECONOMIC PACKAGE worth €500 billion has been endorsed by EU leaders and is to be in place by 1 June to help European countries begin recovery from the Coronavirus pandemic. 

Ways in which a recovery path can be developed in the coming months were discussed during a video conference with EU leaders and ECB president Christine LaGarde present. 

Participants welcomed the European Commission’s intention to undertake a sector-by-sector analysis on the economic impact of the crisis so as to better target supports necessary for recovery.

During the meeting Taoiseach Leo Varadkar highlighted acute difficulties in agriculture resulting from a collapse in exports and prices, and the need for urgent financial support for farmers. 

The Irish Farmers’ Association commended Varadkar for raising the issue, with IFA president Tim Cullinane adding: “Our Government needs to increase the pressure at EU level for a much more substantial financial package, including direct payment aid.”

Details of budgetary supports have yet to be teased out with European Commission President Ursula von der Leyen telling leaders she expected there will be a combination of loans and grants.

But deep differences remain over the best way to achieve those goals.

More than 100,000 Europeans have died from the virus, according to the European Centre for Disease Prevention and Control, and business is only slowly starting to open in some countries.

The uneven impact of the virus has prompted fears that relatively wealthier partners like Austria, the Netherlands or Germany – which have better weathered the pandemic – are not willing to take swift, sweeping measures backed by real economic firepower to support harder-hit countries like Spain and Italy.

But the leaders did agree to task the European Commission with revamping the EU’s next seven-year budget, due to come in to force on January 1 but still the subject of much disagreement, and devise a massive recovery plan.

While no figure was put on that plan, officials believe that up to €1.5 trillion would be needed.

“There is only one instrument that can deliver this magnitude of task behind the recovery and that is the European budget clearly linked to the recovery fund,” Ursula von der Leyen said.

“The budget is time tested. Everybody knows it. It is trusted by all member states.”

Countries like the Netherlands and Germany generally remain reluctant to share too much debt out of fear of having to foot the bill for others, and debate raged today over what form some of the funding should take, either grants or loans.

Von der Leyen said that the budget “investment should be front loaded in the first years and of course it is necessary to find the right balance between grants and loans”.

When asked what amount of money might be found with some adjustments, she said: “We’re not talking about billion, we’re talking about trillion.”

Even before these new funds are agreed, the EU’s institutions and member countries combined have mobilised around €3.3 trillion for overburdened health services, suffering small businesses, embattled airlines or wage support for people unable to work.

Despite knowing that the budget revamp will cost her country more money, German Chancellor Angela Merkel endorsed the plan, saying “of course this means Germany must calculate with higher contributions for the next budget … but that’s right and good”.

In normal times, the seven-year budget totals around 1% of EU gross national income, or just over one trillion euros.

French President Emmanuel Macron welcomed that the summit found “a consensus on a fast response and a strong one”.