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Merkel panic: German leader fears EU will fail in bid to deliver economy-saving deal

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The German Chancellor claimed she could not guarantee the support of every EU member state for the proposals put forward by European Council President Charles Michel ahead of Friday’s leadership summit in Brussels. She said: “I don’t know if we will reach an agreement. It is still not sure and the path remains long.”

Mrs Merkel, the head of the EU’s rotating presidency, is set to play a major role in bringing European prime ministers and presidents together during their first face-to-face meeting since the pandemic exploded access the Continent.

Mr Michel last week presented plans for the EU’s next-seven year budget of €1.074 trillion and a recovery fund of €750 billion to sent aid to pandemic-stricken economies across the bloc.

Under European Commission chief Ursula von der Leyen’s blueprint, the bloc would hand out €500 billion in grants and €250 in loans.

The package will require unanimous support from all of the EU27’s leaders in order to be approved.

It faces significant opposition from Dutch prime minister Mark Rutte – who is a senior member of the so-called “Frugal Four” of fiscally conservative northern member states – who has insisted the attachment of political conditions before the fund is accessed.

Italian prime minister Giuseppe Conte warned southern capitals would not be able to back proposals containing strict conditionality.

He said Rome was happy for EU institutions to monitor its economic reforms but suggested excessively stringent conditions would be counter-productive.

He said: “It’s not in anybody’s interest to introduce conditionality that would compromise the support of the programme or give it scarce practical impact.”

Mr Conte held talks with Mrs Merkel yesterday at the German leader’s Meseberg retreat just north of Berlin.

Talks in the European Council’s Europa building are set to get underway on Friday, with some diplomats believing the negotiations could run through into Sunday if a deal is not found.

Pressure is on the EU’s leadership to reach an agreement with the bloc facing its worst recession since the Second World War.

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Mr Michel last week pitched a new plan in the hope of generating enough support for both the seven-year budget and recovery fund.

He offered wealthy nations a rebate on their contributions to Brussels’ cash coffers and shrunk the overall size of the 2021-2027 spending plans by €25 billion.

“In the next weeks and months we will face more unemployment in many member states and we will face and observe, unfortunately, bankruptcies with social consequences – it’ll be more and more visible,” he said.

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“So that’s why it’s important not to wait, important to make a decision to send a strong signal, and that’s why I support a quick decision.”

Mr Rutte has claimed the offer of a financial rebate is “an entry ticket” for Friday’s negotiations.

New opposition has emerged in Hungary with prime minister Viktor Orban telling the bloc he will veto the spending plans unless Brussels drops a probe into alleged rule of law breaches.

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