Franco-German pragmatism to the fore

In a videoconference on Monday 18 May, Angela Merkel and Emmanuel Macron announced a four-pillar recovery plan for Europe. It includes a proposal for a €500 billion European recovery fund, which would be financed by European Union bond issuance and would be provided to the countries worst-affected by the crisis in the form of grants (direct transfers). Christine Lagarde hailed the proposals as “ ambitious, targeted and welcome” . They were also welcomed by the president of the European Commission, who considered the proposal constructive and commensurate with the economic challenges facing Europe This fund, while a one-off addition, breaks the taboo of debt mutualisation, at least to some extent, and paves the way for a genuine European budget. However, the proposal was quickly followed by opposition to the creation of this fund and it may prove difficult to build a consensus. It will require the unanimous approval of the 27 member states and approval of the budget extension by the national parliaments