While the European Commission is working on its proposals on the Covid-19 post-pandemic recovery plan and the EU's multi-annual financial framework (MFF) for 2021-2027, expected around 20 May, France has refined its contribution on the subject (see EUROPE 12480/3).
In a seven-page document, as seen by EUROPE, France updates its position to take account of the approaches adopted by the Commission to date, in particular a mix of loans and grants, a recovery plan linked to the 2021-2027 MFF and needs estimated at between €1,000 and €1,500 billion.
Paris is counting on a recovery plan that would make it possible to top up the EU budget over the period 2021-2023 by between €1,000 and €1,500 billion (i.e. a minimum of between 1% and 2% of the gross national income of the EU27 per year, from 2021 to 2023), using the margins under the ceilings, to enable the Commission to issue debt jointly.
"The Union would create a vehicle under article 122.1 TFEU to host the Recovery Fund and raise debt", the French document reads.
France considers it essential that this recovery fund be put in place as soon as possible, "possibly before the next MFF comes into force".
There would therefore be a debt issue at the start of the next MFF, after which funds would be paid into the EU budget for joint investment expenditure and for national spending to tackle the crisis, via 'national recovery plans'.
Grants and loans. France envisages paying out mainly grants, but loans could be used to supplement them to reach the €1,000 to €1,500 billion needed.
Moreover, for France, these loans should be characterised by a three-year grace period, very long-term repayment (the term of 40 years is mentioned) and a particularly low interest rate (close to that granted to the Commission, which has a triple-A rating).
Expenditure would be reimbursed via the EU budget, hence the interest, according to France, in providing new own resources (preferably climate and environment-related) for the EU to alleviate the contributions of countries at the beginning of the MFF.
The modernisation of the EU budget would be ensured through existing programmes (InvestEu, Horizon Europe, Digital Europe).
The sectors to benefit would be those most affected by the pandemic (tourism, restaurants, aviation, automobile industry, culture). Investments could also be made in health systems, employment, the 'European Green Deal', innovation or industrial policy.
The idea of using pooled debt is dividing EU countries. Spain also advocated a recovery fund fuelled by European debt (see EUROPE 12470/1).
According to the Commission's initial plans, the Recovery Plan could raise €323 billion from the markets (see EUROPE 12474/1, 12473/2). (Original version in French by Lionel Changeur)