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Since last Friday, the leaders of the 27 countries that comprise the European Union are meeting to try to approve the background of economic recovery for the crisis of the coronavirus. In addition, also need to agree the budget for the period 2021-2027. The negotiations, however, are entrenched, because the countries don’t end up agreeing, and there must be unanimity. On the one hand, on the amount of aid from the recovery fund. This part of the 750.000 million euros , although not all countries agree with this amount. In addition, you also agree on what percentage of that money would come in the form of direct transfers, and how much as loans.
This money, to which Spain can access, in principle, shall be destined to finance projects for health purposes, programs of support to the environment or the green economy or the encouragement of private investment within the countries that receive the aid. Yes, if you agree to aid, we must undertake reforms.
As has been referred to above, the money will be allocated for the fund is one of the hot spots. And that is that there are four countries that are intended to reduce the amount , as well as to toughen the conditions for access to he and to have more percentage for loans to direct transfers.
The countries that require harsh conditions are Netherlands, Austria, Sweden and Denmark . Are the so-called “countries frugal”, which also counted with the support of Finland at the time of lowering the money from the recovery fund. The four also were opposed before the outbreak of the crisis to increase its contribution to the EU budget, making failure of the summit held in February.
And why they are called countries frugal? Because these four countries have been the most austere in recent years. Except Austria, which had a debt of 67% of GDP, the rest yes I had it before the outbreak of the crisis, at below 60%, as required by the Treaty of Maastricht. In addition, the four countries with a structural deficit close to zero, while their rates of saving are positive. That is to say, these states have a margin to deal with the crisis of the coronavirus.
By comparison, Spain’s debt is currently slightly above 100% of GDP, and the worst-case projections estimate that the health crisis will hit the range of between 115% and 120%. In terms of the deficit, this was 2.8% of GDP in 2019. In this way, approached again the 3%, that is when Brussels is running the excessive deficit procedure, which was abandoned, after several years of crisis, in 2018, when established at 2.6%. Now, the forecasts suggest that the deficit will exceed 11.5% this year.
For these reasons, the countries frugal they demand higher conditions to countries that want to benefit from the aid. In the case of Spain, our country should address reforms such as the pension system , the labour market, as well as trying to raise more money in the public coffers, especially after the completion in recent months laws that increase public expenditure.