The EU on Thursday proposed a bloc-wide guarantee that could raise 100 billion euros ($109 billion) to aid strained national unemployment schemes as millions of jobs are hit by efforts to slow the coronavirus outbreak.
The proposal by European Commission boss Ursula von der Leyen is intended to help heal a bitter divide among EU member states over how to respond to the severe economic recession that will result from the epidemic.
In the complex scheme, the bloc”s 27 national governments would give a temporary budget to Brussels so the EU executive could raise money on the markets to fund member states struggling to help workers suddenly left without work.
“This is European solidarity in action,” Von der Leyen told a news briefing.
“The Commission will provide loans to those member states that need them to strengthen their short-time work schemes. These schemes now exist in plans straight across the European Union,” she said.
To finance the loans to member states, the commission would borrow on the financial markets, allowing member states to benefit from the EU”s low borrowing costs, a statement said.
The instrument “will act as a second line of defence, supporting short-time work schemes and similar measures, to help member states protect jobs and thus employees and self-employed against the risk of unemployment and loss of income,” it said.
Member states will need to raise a minimum amount of 25 billion euros in guarantees in order for the instrument to work, the commission said.
The proposal is to be presented on April 7 to EU finance ministers who will meet by videoconference to discuss various ways to spark a recovery in Europe once the virus outbreak is under control.
Hardest hit Italy and Spain are furious against Germany and the Netherlands that so far refuse to a agree on a jointly-financed fiscal bazooka to avoid a major recession in Europe.
