The Netherlands and its partners in the ‘frugal four’ group of European countries have again reiterated their support for loans to aid economic recovery and warned that all spending must be responsible, this time in a letter in the Financial Times.
Dutch prime minister Mark Rutte and the leaders of Sweden, Denmark and Austria set out their vision ahead of Friday’s video conference between EU leaders to discuss recovery fund proposals drawn up by the commission.
‘What we do is about solidarity, which goes hand in hand with sustainable European growth,’ the letter, which is behind a paywall, said. ‘Belonging to a close and deep circle of friend and allies, we owe that to each other.’
The EU has already taken the ‘bold decision’ to mobilise unprecedented amounts of money and the frugal four countries, the letter states, are willing to do more.
However, the letter goes on, important principles should not be thrown overboard. ‘How can it suddenly be responsible to spend €500bn in borrowed money and to send the bill into the future?’
‘Part of the EU Commission’s recent proposal is to find new ways for the bloc to finance itself. But there is no such thing as new or fresh money. Money spent will have to be earned and paid back, by taxpayers.’
The four countries, the letter continues, fully support the creation of a time-limited recovery fund to target those hit hardest by the crisis. However, the ‘fundamentally sound way’ to use that money is to ‘convert it into loans for those who really need them on the best possible terms.’
In addition, the letter goes on, the emergency fund should not be mixed up with other priorities and challenges facing the EU, and which are addressed in the next seven year budget.
‘We are all affected by this crisis and it puts all national budgets under severe strain. So we must all have a realistic level of spending. More importantly money should be used… only where we know it can make a real difference.’
EU leaders are due to discuss the Commission’s plan to set up a €750bn recovery programme on Friday.
The package is attached to a revised seven-year budget proposal which would total €1.1trillion for the years 2021 to 2027 – up from the €1.095 trillion package proposed earlier this year.
The Commission plan envisages a mix of €500bn in grants to countries hit hardest by the pandemic, and another €250bn available as loans. Italy and Spain will get much of the new money which marks a turning point for the EU in moving towards joint debt.
Rutte said after the proposals were published that he expected the negotiations to take some time.
‘We have set out our position clearly,’ Rutte said. ‘Countries which are bailed out will have to say what they will do to make sure this situation does not arise again.’
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