EU launches €750bn stimulus package to kickstart economies devastated by Covid-19

It is described as the biggest ever stimulus package and will be comprised mainly of loans and grants for businesses.

The EU launched a €750 billion stimulus package on Wednesday aimed at kick-starting European economies including Ireland’s which have been devastated by the Covid-19 lockdowns.

It is described as the biggest ever stimulus package and will be comprised mainly of loans and grants for businesses.

Out of the total package - labelled the “Next Generation” fund - €560 billion will be offered in the form of free grants to EU member states.

Another €250 billion will be made available as loans to repair the single market from the economic blow of the coronavirus.

European Commission President Ursula von der Leyen said this is Europe’s moment to act.

She said: “This is Europe’s moment. Our willingness to act must live up to the challenges we are all facing. With Next Generation EU we are providing an ambitious answer.”

The plan includes handing out hundreds of billions of euro to the hardest-hit countries like Spain and Italy, despite objections from the Netherlands and Austria.

It is unclear how much of the cash will go to Ireland as this country has coped well with controlling the spread of the virus.

The money will go directly to member states and, as guarantees for the European Investment Bank, to companies.

Some money will go as free grants to the usual EU budget programmes, including development aid and farm subsidies.

Other funds will be available to member states as loans based on recovery and reforms plans they would propose to Brussels.

One of the main aims of the plan is to boost the EU’s green and digital capacities and access to funds would also be conditional on following guidelines and rules.

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New money would come from unprecedented mass borrowing by the Commission against the EU budget.

The Commission will also start covering interest from the EU’s 2021-27 budget and repay the cash borrowed by 2058.

Resources for that would come from the EU budgets from 2028 that are replenished with the usual fees from member states, some existing EU taxes as well as new levies on CO2 emissions and a digital transaction tax.