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The European Commission unveiled a 750 billion euro recovery plan on 27 May in the face of the severe impact of the covid-19 outbreak. If approved, the EU's 2021-2027 budget will climb to €1.85 trillion.
The European Union will use its good credit rating to borrow from financial markets, according to a statement from the European Commission.Once the money is in place, the EU will allocate 500 billion euros to member states and the remaining 250 billion euros will allocated in loans to member states.
Announcement showed that the recovery plan has three key points: one is to support the investment and reform of EU members, such as allocating 310 billion euros to the members, providing financial support for member states to develop "green economy", and digital transformation, also adding extra 55 billion euros to the integration of the EU's development projects, adding extra 40 billion euros to the European Union "carbon neutral" project.
The second is to encourage private investment, such as the creation of a solvency support vehicle with a budget of €31 billion to mobilise private capital to support enterprise development; to raise the capital scale of InvestEU (EU's flagship investment programme) to 15.3 billion euros and mobilise private capital to invest in EU projects.
The third is to draw lessons from the health crisis. For example, a health project with a budget of 9.4 billion euros will be set up, an additional 2 billion euros will be allocated to the EU civil defense mechanism, and the funding scale of EU research and innovation funding scheme (horizon 2020 plan) will be expanded to strengthen health security and prevent the recurrence of health crises.
According to the announcement of European Commission, the €750 billion recovery plan will be integrated into the EU's fiscal budget from 2021 to 2027, which will increase the budget size from €1.1 trillion to €1.85 trillion during 2021-2027, further increasing the proportion of the budget in 2021-2027 to the gross national income of EU member states.
According to procedure, the recovery plan still needs to be approved by EU member states and the European Parliament before it can take effect. Gerhard von der leyen, European Commission President, expressed that the plan is expected to turn the big challenges the European Union faced into "opportunities" and provide an "ambitious answer" to the EU's future development. But it is widely expected that the recovery plan will not be easy to "pass" at this summer's EU summit, as countries such as the Netherlands, Austria, Denmark and Sweden value fiscal discipline and are opposed to direct EU funding to member states.