27/03/2020
DEADLOCK AS EUROGROUP AND EUROPEAN COUNCIL DISCUSS FURTHER FISCAL SUPPORT
This week, the Eurogroup began discussions on additional forms of fiscal support to euro area Member States in light of the COVID-19 emergency. Whilst there was “broad agreement” on the use of the European Stability Mechanism’s (ESM) Enhanced Conditions Credit Line (ECCL) to facilitate access to financing, Finance Ministers asked EU leaders for political guidance on the way forward. Two days later, however, the European Council reverted back to the Eurogroup to continue discussions and present proposals within two weeks, after being unable to reach an agreement during a six-hour long videoconference.
G20 WILL DO “WHATEVER IT TAKES” TO COMBAT PANDEMIC
The G20 leaders held a videoconference to discuss international cooperation on the response to COVID-19. In a concluding statement, the G20 committed to do “whatever it takes” and to use all available policy tools to minimise the economic and social damage from the pandemic, restore global growth, maintain market stability, and strengthen resilience. Regarding public health measures, G20 leaders committed to continue exchanging epidemiological and clinical data as well as materials for research and development. They also pledged to strengthen health systems globally and expand manufacturing capacity to meet the needs for medical supplies.
COMMISSION ACTIVATES STATE AID TEMPORARY FRAMEWORK
The European Commission adopted a Temporary Framework to enable Member States to utilise the full flexibility foreseen under State aid rules to support the economy in the context of the COVID-19 outbreak. In particular, the Temporary Framework provides for five types of support: i) direct grants, selective tax advantages and advance payments (up to €800,000 to a company to address its urgent liquidity needs); ii) state guarantees for loans taken by companies from banks; iii) subsidised public loans to companies; iv) safeguards for banks that channel State aid to the real economy; and v) short-term export credit insurance.
EUROPEAN PARLIAMENT ENDORSES PACKAGE ON COVID-19
The European Parliament adopted with an overwhelming majority the three Regulations that were put forward by the Commission as part of its response to the COVID-19 outbreak. According to the texts approved by the Parliament, EUR 37 billion will be channelled to citizens, regions and countries affected by the pandemic under the CRII. In addition, the EU Solidarity Fund will be extended to cover public health emergencies, making up to EUR 800 million available for European Member States this year. Lastly, the suspension of EU rules on airport slots will stop air carriers from operating empty flights during the pandemic and thus prevent further financial losses and ecological damage.
COUNCIL OPENS ACCESSION NEGOTIATIONS WITH ALBANIA AND NORTH MACEDONIA
The Council adopted conclusions on the EU’s enlargement policy and the EU-Western Balkans stabilisation and association process with regards to Albania and the Republic of North Macedonia. Overall, it found that both countries have made sufficient progress and decided to open accession negotiations. The European Council subsequently endorsed the Council conclusions; this will allow for a negotiations framework to be set up as soon as possible and for the first intergovernmental conference to be convened. The Council also supported the Commission proposal for a new enlargement methodology in the Western Balkans, which should be accommodated in the existing negotiating frameworks with Montenegro and Serbia.
COMING UP NEXT WEEK
Karl Isaksson, Managing Partner Brussels, Kreab