The big news this morning is the EU reaching an agreement on its' Euro 750 bln rescue fund and a total €1.1 trillion EU budget, after its longest ever, five-day, marathon negotiating session. Ode to Joy is blasting round the halls of Berlaymont, but it's hardly the symbol of solidarity Macron, Merkel et al are claiming between the member states. Its pragmatism in action as the frugal four/five (depends if you count Finland) were bought into line with promises of rebates, Hungary got away with Orban's war on democracy, while Poland wriggles out of carbon neutrality by 2050 and can keep burning coal.
It would be easy to pick holes across the whole conflabulated deal, but why snipe? We should celebrate Europe reaching agreement. The market loves it…
The major point of friction over recent days was grants versus loans. The deal splits into €360 of loans and €390 of grants to aid Covid recovery across Europe, with the costs to be borne by all the members, in practice meaning the 12 net contributors.
The Frugal North wanted Italy – because this is mostly about bailing out Italy – to be on the line for any money it receives. Instead, Italy gets €82 bln of handouts from Brussels, which will help enormously…. to finance all sorts of murky goings-on? Or, who knows… some of it might even go to boosting Italian employment as the virus recession deepens.. Italian bonds have tightened on the news. Italy will claim a victory.
Let's not be negative.. This morning's agreement is another step in the EU's slow and painful path towards a Federal Europe. Much to the chagrin of Brexit-supporting, EU-hating Tory skeptics – Europe is getting there, plod by agonising plod. Sure, there are massive cracks in the edifice, which are disguised by slapping on a veneer of Polyfilla that will need fixed again in a few years time.. but its slowly happening..