European summit : discount, MY... The lexicon of the stimulus package - The Point

A summit is considered historic, and a lot of jargon. How to find in the expressions of the bureaucratic financial instruments of the stimulus plan and the euro

European summit : discount, MY... The lexicon of the stimulus package - The Point

A summit is considered historic, and a lot of jargon. How to find in the expressions of the bureaucratic financial instruments of the stimulus plan and the european budget ? Here's a little guide to find his way back through the forest of expressions and acronyms of the volapük european.

1. Discount

The european budget is, primarily, made up of financial contributions from member States paid into the common pot. Each contributes according to its relative weight in the rich european as a function of its GDP. Germany and France are the biggest contributors, but one thing distinguishes them : the " discount ". It is a drawback obtained in the result of a negotiation old on the important contribution Germany. The history goes back to the " I want my money back ", Margaret Thatcher in 1979, opening a major crisis in the european integration process which will end only in 1984. The iron Lady, after years of struggle, gets a discount on the national contribution that would have had to pay the United Kingdom to the european budget. "Maggie" considers it unfair to pay more than she receives, while his country is lagging behind economic. Of tired war, europe's leaders to him, grant a discount after plenty of tussles in June 1984. The british rebate allows the Uk to contribute less than the States in its category, such as France.

But what the Uk saves leaves a hole in the crate european. They fill it ? The other countries, those who do not have a rebate... The worm is in the fruit ! Because now the Germans claim in their turn a " rebate on the rebate ". Their reasoning is simple : because the British contribute less, and Berlin is claiming a rebate on the compensation that the british rebate requires them to disburse. In 2002, it is done : Germany wins the case and is offered a 25% decrease in the amount to be offset due to the uk rebate. Hence the term " discount rebate ". Then, all of the other net contributors will follow suit : Austria, Sweden, the netherlands, the so-called "frugal" today. Since, there are two other types of rebates : a rebate on the gross national income is still in the netherlands, Austria, Sweden and Denmark. And finally, a last reduction (on the payment of VAT) benefits Germany, the netherlands and Sweden.

Read also european recovery Plan : an agreement snatched from the high price !

the Three countries are the turkeys of the farce : France, Italy and Finland. They have not negotiated any of these three types of discount. They compensate full pot discounts from all the others. So Italy that the recovery plan wants to help as a priority, will do a check at the place of the Germans ! Where is the logic ? Don't look for, the european policy is also made of this slag absurd...

When the British left the european Union, Emmanuel Macron believes when the time comes to finish at least with the " discount the discount ". Well, no ! It is missed ! Not only is the "discount" survives, but it increases for the frugal of us $ 10 billion over 7 years. The total discount represents 52 billion euros over 7 years. France being the richest country of those of the 22 countries that have not, it is she who makes them the biggest cheque compensatory : 1.5 billion euros per year. Germany has not asked to see his rebate increase (3,671 billion per year).

2. "Next Generation EU"

This is the baptismal name of the european recovery plan. It is born from the imagination of officials of the european Commission. The expression, now reduced to the acronym NGUE, has been pronounced for the first time by Ursula von der Leyen before the european parliament when she presented the general idea : a large loan of 750 billion euros which would allow him to distribute grants to the member States or of the loans in the best conditions in the market. Insisting on " Next Generation ", the Commission felt that it was necessary to take advantage of the crisis of the Covid-19 for not only back to the european economy, but look to the future through industries, of cleaner energy... The challenge is to stay in the top tier of the continent by investing heavily where others – such as China, the united States – are not going to look at the expense. Others have ironisé on the expression "Next Generation" considering that with debt-until 2058, the burden of the crisis would be passed on to future generations. Not really a gift... In fact, nobody has a better solution to propose. And this is not without a certain apprehension that the member States have decided to support, for lack of better, this project, whose funding remains uncertain.

3. The "facility for recovery and resilience"

This is the name given to the main instrument of stimulus for the member States. It combines 312,5 billion euros in subsidies and 360 billion euros in loans. To benefit from this money, member States should develop national plans of investment that they submit for assessment to the Commission. This is to restart the european economy while upgrading (greening and technologies of the future). Thirty percent of these monies must be dedicated to climate neutrality and the expenditure must not aggravate the emissions of CO2. The decision to validate the plans is taken by the european Council by a qualified majority. A State or several may refer the matter to the european Council if serious deficiencies are recognized in the execution of expenditures.

The key allocation is divided into two time. Seventy percent of the amounts will be allocated by taking into account the population size and unemployment rate of the past five years. Then, for the remaining 30% will be taken into account, as of 2023, the variation of the GDP of the States between 2020 and 2021.

4. The Bottom of just transition

to achieve carbon neutrality in 2050, the member States have an envelope. It comes to investing in renewable energy, in place of coal. All States do not depart from the same starting point depending on their energy mix. Hence the fact that Poland is the most helped to get out of the coal. After the rabotages, this fund does not represent more than 10 billion euros, three times less than expected.

5. The MY

The european stability Mechanism is another instrument of loans under terms and conditions, separate to NGUE. It was established in 2012 to address the failure of a member State of the euro area. On the occasion of the crisis of the Covid-19, it has been used as " an instrument of emergency ". Two hundred and forty billion euros from this MY have been mobilized to provide assistance to States that seek assistance to cope with health expenditures curative or preventive. The conditionality has been negotiated so that it is kept to a minimum. At the outset, it was intended for the countries most affected by the pandemic to help, for example, to rebuild their hospital capacities stretched to the limit. Italy should have been one of the main beneficiaries (a lending envelope of about $ 37 billion is available).

But the Italian government is reluctant to use it. The ESM has marked the spirits at the time of the Greek crisis, and it is synonymous, in many minds, in conditions of drastic reform, a loss of sovereignty. The government Tale is shared for use and is subjected to the fire of his nationalist opposition, Matteo Salvini in mind, as soon as it is question of " MY ", the symbol of the submission of Italy to the rule of Brussels. In short, the word " MY " has become toxic in the vocabulary of Italian politics. Italy, for the moment, tries to pass. Funds are available from the 1st of June.

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Updated Date: 21 July 2020, 12:33

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