EU plans to spend €100bn on saving jobs amid coronavirus crisis

Ursula von der Leyen has laid out plans to borrow and spend €100bn to stop firms in the EU laying off staff during the coronavirus pandemic, and has apologised to the Italian people for the bloc’s lack of solidarity.

The president of the European commission said she was confident the 27 member states would back her scheme, describing the EU’s budget as the Marshall plan for the crisis, in reference to the post-second world war fund that rebuilt Europe.

The EU’s executive branch is proposing to borrow from the international markets and make loans to member state governments to allow them to fund short-time working schemes, under which employees work reduced hours with some of their salary paid by the state.

Von der Leyen said that such schemes, including Germany’s Kurzarbeit system, had ensured the northern member states had been well placed to rebuild after the financial crisis in 2008.

“Will it be enough? We are talking about €100bn of loans,” she said. “It is an enormous amount of money …This is a massive support of the European Union that is laid forward here.”

Von der Leyen said the scheme, called Sure, was an example of “European solidarity in action”, following criticism of a lack of support by EU member states for those most affected by the spread of Covid-19, including Italy and Spain.

default

In an article published in the Italian newspaper, La Repubblica, on Thursday, Von der Leyen had sought to assuage some of the anger at the EU’s stumbling performance.

“I apologise, we are with you,” she wrote. “Today, Europe is mobilising alongside Italy. But that has not always been the case. It must be recognised that at the start of the crisis, faced with the need for a common European response, far too many thought only of their national problems.”

Von der Leyen has been under pressure to offer evidence that Brussels has the tools to help in the crisis after governments clashed over the ill-fated idea of coronabonds, an instrument to allow member states to raise cash on the financial markets on the same terms.

Germany and the Netherlands were among those resistant to the idea, which would make borrowing more expensive for the wealthier EU member states.

Von der Leyen said that finance ministers would examine the commission’s job retention plan next Tuesday. The Sure programme will only come into effect once all member states have put up guarantees collectively worth €25bn.

Countries will apply for loans from Brussels when they are “seriously threatened with a severe economic disturbance”. The need for the fund will be reviewed after 12 months.

The UK will not participate in the scheme as the withdrawal agreement rules out any further budgetary liabilities for the British government.