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COVID-19

‘Historic day’: How the EU agreed its €750 billion rescue plan to save shattered economies

EU leaders emerged from a marathon four-day and four-night summit Tuesday to celebrate what they boasted was a historic rescue plan for economies left shattered by the coronavirus epidemic.

'Historic day': How the EU agreed its €750 billion rescue plan to save shattered economies
Spain's Prime Minister Pedro Sanchez (L), French President Emmanuel Macron (C) and German Chancellor Angela Merkel (R) look into documents during an EU summit in Brussels on July 20th, 2020. Photo: AF

The 750-billion-euro ($858-billion) deal was sealed after intense negotiation that saw a threats of a French walkout and a Hungarian veto – and fierce opposition from the Netherlands and Austria to too generous a package.

“These were of course, difficult negotiations in very difficult times for all Europeans,” EU Council Chief Charles Michel, whose job was to guide the tortuous talks over more than 90 hours.

He dubbed the summit “a marathon which ended in success for all 27 member states, but especially for the people”.

The package, seen by AFP, was made possible by the crucial backing of Germany and France and includes the biggest ever joint borrowing by the 27 members of the bloc, something that had been resisted by Berlin and the so-called “frugal” northern states for generations.

The deal is a special victory for French President Emmanuel Macron who came to office in 2017 committed to strengthen the European Union, but had struggled to deliver against member states with less ambition for the  seven-decade-old EU project.

“This is a historic change for Europe,” Macron told reporters in a joint press conference with German Chancellor Angela Merkel, speaking of her relief that Europe had, in her eyes, shown itself equal to “The greatest crisis in the history of the European Union”.

'Frugals' fight

The package will send tens of billions of euros to countries hardest hit by the virus, most notably heavily indebted Spain and Italy that had lobbied hard for a major gesture from their EU partners.

Their call for solidarity was met with the fierce opposition of the “Frugals”, a group of small, northern nations led by Netherlands, who believed strongly that the stimulus package was unnecessary.

Spanish Prime Minister Pedro Sanchez hailed “a Marshall Plan for Europe”, that would boost Spain's suffering economy by 140 billion euros over the next six years.

German Chancellor Angela Merkel (R) and French President Emmanuel Macron (L) leave after their joint video press conference at the end of the European summit at the EU headquarters in Brussels on July 21th, 2020. Photo: AFP

But Prime Minister Mark Rutte of the Netherlands denied that the advent of joint borrowing for the rescue heralded the start of what he had warned of before the talks – a “transfer union” with a permanent north south transfer of wealth.

“This is a one off, there is a clear necessity for this given the excessive situation,” he told reporters.

The frugals were also deeply apprehensive of sending money to southern countries that they see as too lax with public spending.

To meet their concerns, payouts from the package will come with important strings attached – a hard pill to swallow for Rome and Madrid who deeply resisted anything resembling the harsh bailouts imposed on Greece, Portugal or Ireland during the debt crisis.

The frugals were also enticed with heavy rebates on their EU contributions, furthering a practice first offered to Britain decades ago, when it was still a member.

'Rule of Law'

The recovery package will complement the unprecedented monetary stimulus at the European Central Bank, that has largely succeeded in reassuring the financial markets despite a catastrophic recession in Europe.

Overall, the deal will dole out 390 billion in the form of grants to pandemic-hit countries.

That was lower than an original 500 billion euro proposal made by France and Germany. Another 360 billion euros was to be disbursed in loans, repayable by the member state.

The stimulus payments will not be blank cheques to member states. 

Spending will be closely controlled and must be devoted to policies seen as compatible with European priorities, including politically difficult economic reforms as well as the environment.

The European Commission, the EU's executive arm, will be in charge of distributing the funds, with the 27 member states able to turn down a spending plan if a weighted majority of them decide to intervene.

The rescue package was agreed along with the EU's long-term budget, bringing the agreed spending to 1.8 trillion euros through 2027.

The plan was nearly upended by Hungary and Poland due to a demand that EU payouts be tied to the “Rule of Law”, Brussels jargon for upholding laws on freedom of speech and an independent judiciary.

Budapest and Warsaw are under fire for offending EU norms, but a proposal to tie the EU budget to those concerns was watered down to the satisfaction of Hungarian Prime Minister Viktor Orban and his Polish counterpart.

The package now requires more technical negotiations among member states as well as a ratification by the European Parliament that could happen as soon as Thursday.

Member comments

  1. So basically when countries suffer thousands of deaths and economic breakdowns, we as Europe tell them “here is a loan, i want you to add it to your debt, and i want you to lower wages and pensions in your country, tax your companies even more etc. etc.”, otherwise i will let you decay because “it is your fault”.

  2. Anyone who calls this agreement a historic rescue plan is naive, at best. Six months after this pandemic began the best these out-of-touch elite can do is offer loans and grants to implement a wish list of EU programs. Little if any will make its way to the small businesses who need it the most. While the US is working on its THIRD package of assistance these smug EU leaders finally have agreed to a package that will have so many strings attached and benefit their pet projects that Italy and Spain will be no better off. This is nothing but a photo-op by a bunch of globalists who are intent on creating a EUROPE no one recognizes. The EU has just shown once again how moribund it is in the face of crisis when technocrats are at the wheel. Time for Italy, Spain, and others to realize the EU should be dissolved in favor of reinstating a country’s sovereignty and creating a trading block to do what the EU was intended to do before it morphed into a cancerous, bureaucracy that imposess more and more control.

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PROPERTY

Where in Italy are house prices rising fastest?

Property values are expected to continue rising overall in Italy in 2023, but the situation looks much better in some cities than others. Here's how average prices compare.

Where in Italy are house prices rising fastest?

Until 2020 Italy’s real estate market had long suffered stagnation, weighed down by a large number of old, neglected properties which were proving difficult to sell.

But the pandemic turned Italy’s property market on its head, leading to the first increase in house prices for years at the end of the first quarter of 2020.

This trend has held up since, and industry experts cautiously predict further price growth in 2023 – albeit more modest than previously hoped.

Factors putting the brakes on growth include the soaring cost of living eroding households’ purchasing power, rising mortgage interest rates, the soaring cost of building materials, and a shrinking economy.

REVEALED: Where in Europe have house prices and rent costs increased the most?

Mortgages are also expected to become more difficult to obtain in 2023, meaning fewer people able to make a purchase.

But despite the gloomy picture overall, the outlook varies significantly around the country and some cities are expected to see a significant rise in prices this year.

Milan remains by far the most expensive major Italian city for a property purchase, but prices are rising faster elsewhere. Photo by Ron Dylewski on Unsplash

A recent report from Idealista Insights, the property search portal’s research team, looked at changes in the average prices per square metre in property listings in Italy’s biggest cities.

In 2022, the price per square metre “generally increased throughout the country, with ‘exclusive’ neighbourhoods becoming even more inaccessible to the average buyer,” the report found.

But, while bigger northern cities saw rising prices across the board, most southern cities were struggling with “stagnation”, it said.

Based on Idealista’s data, here are the ten most expensive cities to buy property in Italy, in order of the rate at which prices are rising.

  1. Genoa: the Ligurian capital is Italy’s tenth-most expensive city to live in – but prices here are rising faster than anywhere else on average, according to Idealista. An increase of 4.5 percent is forecast for Genoa in 2023, meaning the price per square metre will go from 1,602 to 1,674 euros.
  2. Bologna: Bologna records the second-highest price increase in Italy compared to 2022. The citywide average price per square metre will rise by an estimated 3.9 percent, reaching 3,419 euros.
  3. Verona: in seventh place we find the city of Romeo and Juliet, where the increase in prices is substantial, equal to 3.2 percent. The average cost will rise by around 80 euros per square metre, going from 2,483 to 2,563 euros per square metre.
  4. Milan: Italy’s economic capital will easily remain the most expensive city for property purchases, with prices set to rise by 2.9 percent compared to 2022. The average price per square metre is expected to exceed 5,300 euros, 150 more than now, with significant price variation between city districts.
  5. Bari: The capital of Puglia in the south-east is set to record an price increase of 2.8 percent, with the citywide average price per square metre going from 1,909 euros to 1,962 – making it the ninth most expensive Italian city in which to buy property and the only southern city to record a significant increase. 
  6. Turin: The northwestern city can expect an overall price increase of 1.5 percent, equal to around 30 euros more per square metre for a final price of 1,979 euros on average. 
  7. Florence: The Tuscan capital still has the second-highest prices, and can expect an average price increase of 1.4 percent, with the cost per square metre to rise from 4,128 to 4,184 euros .
  8. Rome: The capital may have some highly sought-after and expensive districts, but overall average prices will remain at around 3,336 euros, up slightly from 3,360 in 2022. This is equal to an increase of just 0.76 percent.
  9. Venice: La Serenissima remains the fifth-most expensive city to buy property again this year as the average price will remain almost unchanged with a reduction of -0.3 percent, meaning the cost per square metre will be around 3,090 euros.
  10. Naples: The southern capital is set to go against the trend, with a -1.5 percent drop in house prices expected. This means the average price per square metre will go from 2,737 to 2,696 euros, a difference of 41 euros.
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