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We will continue to show solidarity and support countries that are most affected by the corona crisis, but this must be done through loans and not through grants

Sebastian Kurz

Germany and France – led by President Emmanuel Macron – yesterday unveiled their proposal to create a mechanism whereby grants will be offered to European member states and regions hit hardest by the new coronavirus crisis. However, Mr Kurz, who returned for his second spell as Chancellor earlier this year, made his concerns clear in an interview with German newspaper Die Welt. He said: “We will continue to show solidarity and support countries that are most affected by the corona crisis, but this must be done through loans and not through grants.”

Mr Kurz suggested he had discussed the issue with leaders from Denmark, the Netherlands and Sweden (which is not a member of the EU), all of whom had voiced similar views.

He added: “Our position remains unchanged.”

Stephan Schrover, a spokesman for Dutch Prime Minister Mark Rutte, gave the ideas presented yesterday a cool reception, saying: “We will consider proposals and ideas like the French and Germans have done.

“Eventually there must be a proposal from the European Commission and that will be the starting point for the discussions.”

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In what Mr Macron described as a “major step forward”, Germany and France said they were also proposing to allow the European Commission to borrow money on financial markets in the European Union’s name, while at the same time respecting EU treaties.

Speaking yesterday, Mrs Merkel said the 500 billion euros proposed for the fund should be paid back over a long time period, with Berlin shouldering roughly 27 percent of the funds – more than 125 billion euros – as was already the case in the regular EU budget.

She added: “We must act in a European way so that we get out of the crisis well and strengthened.”

German Foreign Minister Heiko Maas today said he was confident the plans would get broad agreement from the EU27.

He added: “It is a first step to a European solution.

“We will have to discuss the details within Europe but we have agreed that we must find a solution quickly.”

Christine Lagarde, president of the European Central Bank (ECB), described the Franco-German plan as “ambitious, targeted and welcomed”.

Speaking to German newspaper Handelsblatt, she said the proposals “open the way to long-term bonds from the EU Commission and allow extensive direct aid from the EU budget to be given to the countries most affected by the crisis”.

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She added: “This testifies to the spirit of solidarity and responsibility that the Chancellor addressed last week.”

The European Commission is to present its own proposal for a Recovery Fund linked to the EU’s next long-term budget on May 27, with President Ursula von der Leyen saying she welcomed the initiative from Paris and Berlin.

She added: “It acknowledges the scope and the size of the economic challenge that Europe faces, and rightly puts the emphasis on the need to work on a solution with the European budget at its core.

“This goes in the direction of the proposal the Commission is working on which will also take into account the views of all member States and the European Parliament.”

The bloc has faced criticism for its response to the pandemic.

The crisis has also opened up divisions in the EU, with Italy, the continent’s hardest-hit nation pushing for a system of debt mutualisation which would spread the cost of repairing the economic damage across the bloc – an approach countries in the north are opposed to.

Speaking yesterday, former MEP and German economist Hans-Olaf Henkel told Express.co.uk: “What have Germans to do with the decisions taken by Italian politicians on their health system or the (very late) decisions on the lockdown in Lombardy?

“On average the per capita wealth of Italians is way above the wealth of for instance Germans.

“So, before Italian politicians like Salvini or Conte or anybody claims money from citizens of other countries to mitigate the financial results of their decisions they should ask their own wealthy people to show solidarity with their own people.

Rather than letting Italian politicians borrow money from and at the risk of other countries, Germany should make a generous gift in exchange for Italy leaving the eurozone and go back to their own currency (New Lira)!

“This way Italy’s Central Bank could devalue their currency to become competitive again, get the economy back on its (own) feet and prosper like Italy did before the euro.”

(Additional reporting by Monika Pallenberg)

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