Dutch Leader Says Budget Perks Needed for EU-Wide Stimulus Deal
Dutch Leader Says Budget Perks Needed for EU-Wide Stimulus Deal
(Bloomberg) -- Prime Minister Mark Rutte said his top priority in negotiating a European Union-wide stimulus package is for the Netherlands to retain the discount it receives when paying its dues into the bloc’s budget, opening a possible avenue for a compromise.
Rutte said he also wants to see conditions attached to any recovery fund that would make sure nations implement reforms to make their economies more competitive.
“We have two very important conditions,” he told reporters in the Hague. “To preserve the rebate, and the other absolute condition is the reforms.”
The Dutch prime minister will meet with German Chancellor Angela Merkel next week to discuss a radical recovery plan that would see the EU issue a massive amount of joint debt, with as much as 500 billion euros ($562 billion) of the proceeds being distributed to countries as grants. The stimulus package, which requires the approval of all 27 EU members, would attempt to mitigate the economic impact of the coronavirus in the bloc, which could see its output contract by 7.4% this year.
Budget Rebate
The Netherlands, along with Austria, Denmark and Sweden, have voiced strong opposition to the extraordinary plan, calling for the overall size to be cut, the amount of grants to be diminished and the conditions for disbursements to be tightened. But the Dutch now join the Danish in indicating that retaining their budget rebates is a top priority in the talks.
In his comments to reporters on Friday, Rutte didn’t mention the size of the deal or the amount of grants to be distributed when highlighting his priorities.
European Council President Charles Michel next week will propose offering the wealthier nations rebates that would limit the amount they contribute to the budget in an effort to win over their approval for the deal, according to an official familiar with the plan.
Denmark was granted a reduction of 130 million euros in its contribution to the 2014-2020 budget, while the Netherlands received a break of 695 million euros, perks that won’t necessarily carry over into the next spending plan.
Some leaders, including Merkel, think time is of the essence. The chancellor said on Thursday that “Europe is in the most difficult situation of its history,” adding that “there has to be an agreement during the summer -- I can’t imagine another outcome.”
European Central Bank President Christine Lagarde echoed that sentiment last month when she told EU leaders that the recent calm in financial markets is in part because investors have priced in action from the governments. If they fail to reach a timely agreement on funding the recovery, then sentiment could shift, according to officials familiar with her comments.
Rutte is more sanguine on reaching a quick outcome.
“If we succeed on the 18th, great. But if not, everything isn’t going to collapse,” Rutte said, referring to a meeting of EU leaders later this month. “I don’t believe an idiotic rush is necessary.”
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