Merkel’s turnouround. The French – German proposal for a EU Recovery Fund

Frau Merkel changed her mind and decided to make a U – turn in a bid on the one hand to save the EU and on the other enhance “competitiveness” of big European (mostly German and/or French) industrial giants.

The new Merkel – Macron plan seems a mixture of ‘helicopter money’ (grants instead of loans) and of a partial return to “state monopoly capitalism” (industrial strategy aiming at creating European champions that can compete on the world market). Of course, as always, a clear commitment of MS to follow ‘sound economic policy and an ambitious reform agenda’ is demanded. It will be interesting to see which concrete conditionalities will be established concerning the Recovery Fund and other instruments linked to it.

If Financial Times are enthusiastic about the proposal it is not the case for Jean – Lic Melenchon and Marine Le Pen in France.

https://www.politico.eu/article/france-germany-propose-e500b-eu-recovery-fund/

https://www.politico.eu/article/franco-german-recovery-deal-meets-resistance/

https://www.politico.eu/article/germany-conservatives-eurobond-awakening/

The joint proposal is here:

https://www.bundesregierung.de/resource/blob/975226/1753772/414a4b5a1ca91d4f7146eeb2b39ee72b/2020-05-18-deutsch-franzoesischer-erklaerung-eng-data.pdf?download=1


Macron and Merkel defy Brussels with push for industrial champions

May 19, 2020
France and Germany on Monday made a rare top-level political push for the creation of European industrial champions as part of the coronavirus recovery, putting themselves on a collision course with the European Commission’s antitrust police.
Paris and Berlin are smarting after Brussels blocked a rail merger between Siemens and Alstom in 2019. To France and Germany, that potential tie-up epitomized the sort of European giant that could stand up to Chinese industry, while Brussels warned such a dominant company would be a bad deal for Europe’s consumers and smaller supply companies.
Read more at https://www.politico.eu/article/macron-and-merkel-defy-brussels-with-push-for-industrial-champions/

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Did anyone notice that Merkel-Macron plan was a very big deal?

Markets could move substantially if EU backs the duo’s new ‘recovery fund’
May 21, 2020
Read more at https://www.ft.com/content/cd0fc1ed-b971-4159-a63c-5c3cf8470aaf

Franco-German rescue plan is a big step forward

Other states should back bold response to the EU’s worst crisis
May 19, 2020
Read more at https://www.ft.com/content/df8773e4-99dd-11ea-8b5b-63f7c5c86bef

Have Merkel & Macron just announced a eurobond-funded godsend for the EU? DiEM25’s view

May 19, 2020

On Monday 19th May 2020, Chancellor Merkel and President Macron announced a joint proposal for a 500 billion euro common fund, to be financed by allowing the European Commission to borrow from the money markets. The fund will, according to the Merkel-Macron proposal, finance directly businesses across the EU – by means mainly of transfers. Is this a breakthrough? Here is my answer on behalf of DiEM25.

Coronavirus threatens future of eurozone, Brussels warns

Pandemic risks exacerbating economic and social divisions between countries

May 6, 2020
The coronavirus pandemic threatens the future of the eurozone by creating huge economic divisions between its 19-member states during what is expected to be the deepest recession since the Great Depression, the European commission has warned.
The EU’s economic commissioner, Paolo Gentiloni, said there was an urgent need to mitigate the inevitable exacerbation of existing social and economic fissures, as countries emerge at different speeds from the unprecedented economic downturn.
The economic output of the Eurozone is likely to shrink by a record 7.75% in 2020 and rebound by just 6.25% in 2021, with unemployment rising from 7.5% in 2019 to 9.5%.
Read more at https://www.theguardian.com/business/2020/may/06/coronavirus-threatens-future-eurozone-brussels-economic-social-divisions-pandemic

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