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Spanish Prime Minister Pedro Sánchez on his way to the Special European Council
for the Coronavirus Recovery Plan in Brussels, 21 July 2020.
A GUIDEPOST Report
Photos: ©European Union
The President of the Government Pedro Sánchez had a hero’s welcome on his arrival at the Lower House of the Spanish Parliament last 22 July 2020, straight from the just-concluded Special European Council in Brussels where, as he put it, “One of the most brilliant pages in EU history has been written.” When the applause finally died down, Sanchez told the Parliament about the importance of the agreement reached at the Special European Council. (Sanchez’s Italian counterpart, Prime Minister Giuseppe Conte, received the same resounding welcome in the Italian Parliament.)
According to Sánchez, the approval by the Heads of State and Government of the €750,000 million (€390,000 million in grants plus €360,ooo million in low-interest loans) European Union Coronavirus Recovery Fund at the Special European Council represents “a historic agreement for the economic recovery of our country [i.e., Spain], not only in offering a response to the COVID-19 crisis, but also to the transformations needed.” The President of the Government added that the agreement is a “great collective and Spanish achievement” and is 95% satisfactory for Spain and 100% for the whole of the EU.
Spain will, in the next few years, receive €140,000 million (€140,000,000,000) from the Recovery package, a lion’s share, next only in size to Italy’s, being the second worst-hit EU Member State by the coronavirus pandemic in the European Union. Spain gets €72,200 million out of the non-repayable €390,000 million (€390,000,000,000) grants. (Alongside the recovery package, EU leaders agreed on a €1074 long-scale billion (in other words, €107,400,000,000,000) EU budget for 2021 – 2027.
Per the Communication of the European Commission (the powerful Executive arm of the EU) to the European Parliament, the European Council, the Council, the European Economic and Social Committee, and the Committee of the Regions,
It is in our common interest to support the hardest hit, strengthen our Single Market and invest in our shared European priorities. In our Union, a euro invested in one country is a euro invested for all. A collective and cohesive recovery that accelerates the twin green and digital transitions will only strengthen Europe’s competitiveness, resilience and position as a global player. This is why solidarity, cohesion and convergence must drive Europe’s recovery. No person, no region, no Member State should be left behind.
At the time of the publication of this report, it looks like the ratification of the Recovery Fund by the Spanish Parliament will push through. However, it augurs a delicate, and perhaps even ardous, negotiation, the government of Sanchez being a coalition government. His party, the PSOE, does not have an absolute parliamentary majority.
Recovery Plan for Europe
Purpose: To help repair the economic and social damage brought by the coronavirus pandemic, kick-start European recovery, and protect and create jobs, the European Commission proposed on 26 May  a major recovery plan for Europe based on harnessing the full potential of the EU budget.
On 21 July 2020, the EU leaders agreed on this recovery plan and the multiannual financial framework for 2021-2027, leading the way out of the crisis and laying foundations for a modern and more sustainable Europe. The Own Resources Decision, once adopted by the European Parliament, should be approved by Member States as soon as possible, in accordance with their respective constitutional requirements.
SURE (Support mitigating Unemployment Risks in Emergency) will provide €100,000 million to help workers and business. The Commission intends to make use of similar instruments in the future.
There will be an outlay for reinforced youth employment support and fair minimum wages to help vulnerable workers, including youth, to build up a financial buffer and get jobs, training and education. Given that women are overrepresented and underpaid in many front-line jobs, there is a need to close the gender pay gap, including through pay transparency measures.
To help Member States generate tax revenue, the Commission will step up the fight against tax evasion. A common consolidated corporate tax base would provide business with a single rulebook. Tax simplification can improve the business environment and contribute to economic growth.
As Europe sets off on its recovery path towards a greener and digital economy, the need to improve and adapt skills, knowledge and know-how becomes all the more important. The Commission will come forward with a Skills Agenda for Europe and a Digital Education Action Plan.
Constructing a more resilient Union
A new pharmaceutical strategy will address risks exposed during the crisis, such as pharmaceutical production capacities in Europe, thereby securing Europe’s strategic autonomy.
A new Action Plan on Critical Raw Materials will strengthen crucial markets for e-mobility, batteries, renewable energies, pharmaceuticals, aerospace, defence and digital applications.
The EU will undertake a Trade Policy Review to ensure the continuous flow of goods and services worldwide and to reform the World Trade Organization. The EU will reinforce its Foreign Direct Investment screening and present a White Paper on an instrument on foreign subsidies.
The Commission will reinforce its rescEU stockpile to build a permanent capacity to handle all types of crises, including by establishing emergency response infrastructure, transport capacity and emergency support teams.
Financing the Recovery plan for Europe
To finance the Recovery Plan, the Commission will issue bonds on the financial markets on behalf of the EU.
To make borrowing possible, the Commission will amend the Own Resources Decision and increase the headroom – the difference between the Own Resources ceiling of the long-term budget (the maximum amount of funds that the Union can request from Member States to finance its expenditure) and the actual spending.
With the headroom as a guarantee, the Commission will raise funds on the markets and channel them via Next Generation EU to programmes destined to repair the economic and social damage and prepare for a better future.
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