EU on the brink: Michel launches desperate bid to salvage coronavirus rescue plan

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Mr Michel’s intervention came after Netherlands Prime Minister Mark Rutte dug his heels in on the issue, while admitting the patience of the EU27 leaders was wearing thin. Former Belgium Prime Minister Mr Michel subsequently offered revised proposals aimed at breaking the deadlock on the second day of the summit in Brussels, according to a document, diplomats and officials.

The plan is highly controversial because two-thirds of the money would be in the form of non-repayable grants, with the so-called “frugal four” countries – the Netherlands, Denmark, Sweden and Austria – concerned it would result in runaway public spending in countries in the south of the bloc, especially Spain and Italy, which have been hardest hit by the pandemic.

In an apparent move to address their worries – the share of free grants in the proposed 750 billion euro recovery fund will reduced to 450 billion euros from 500 billion.

Mr Michel is hoping the amendment, together with plans for an ’emergency brake’ on disbursement of funds, would appease Mr Rutte and his allies, who want conditions attached to grants and would prefer to see those countries worst affected by the coronavirus crisis take loans.

The proposal would also increase rebates on the core EU budget for Austria, Denmark and Sweden.

Speaking this morning, Mr Rutte, who is insisting any money paid out from the recovery fund must first be vetted by The Hague, said he would not budge on the issue – while acknowledging his country was becoming increasingly isolated as frustrations mount among the leaders attending the summit.

He added: “This will probably take a while. It is getting a bit lonelier, I’m afraid.

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“I’m doing this for the whole of Europe, because it is also in the interest of Spain and Italy that they emerge from this crisis with strength.”

Speaking last night, Austrian Chancellor Sebastian Kurz said he rejected the current proposals.

He added: “Our most important central demand is that there should be no long-term debt union but that what is decided here remains a one-time action.”

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Kurz said he had made his views clear during talks with German Chancellor Angela Merkel and French President Emmanuel Macron on the sidelines of the summit.

Mrs Merkel herself was downbeat when discussing the prospects of a deal yesterday, saying: “We are all going into the talks with a lot of vigour but I must say that the differences are still very, very big and so I can’t yet say whether we will get a solution this time already.

“I expect very, very difficult negotiations.”

In a scathing attack earlier this week, Dutch MEP Derk Jan Eppink told Express.co.uk: “The plan proposed by the European Commission does not offer any long term solutions.

“It is the typical EU mantra whereby creating more debt is seen as a solution for the economic and political problems we face. But it is not.

“The Recovery Package does not tackle the underlying problems we face in the EU and eurozone today.”

He added: “The EU sees itself as an example for the world to follow.

“It is blinded by arrogance and tends to overlook its own shortcomings. Just like Icarus.

“This plan by the Commission, which will cost a whopping €750billion is only used to increase power by Brussels.

“But it will weaken the entire position of the EU and its member states.”

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