Macron Confident of EU Stimulus Deal While the Dutch Have Doubts

French President Emmanuel Macron is turning up the heat on European member states who’ve expressed misgivings about plans for a massive spending program to revive the economy.

Macron said that after meeting with the Dutch premier on Tuesday night he’s confident the European Union’s 27 members will reach an agreement on the proposal for a 750 billion-euro ($840 billion) fund. The Dutch weren’t so sure however. A person familiar with the discussion said the Dutch side still has the impression that some of the differences between France and the Netherlands remain unbridgeable.

The French leader will meet with German Chancellor Angela Merkel Monday to prepare for a critical summit beginning July 17, the first time that European Union leaders will be meeting in person since the start of the pandemic. Macron will also speak to leaders of Spain, Italy and Portugal this weekend -- all strongly supportive of the plan to help those worst-hit by the pandemic and its economic fallout.

“After my visit to The Hague yesterday, for a long exchange with Mark Rutte, I’m convinced we will find common ground,” Macron wrote in a LinkedIn post Wednesday. “We both believe in the solidarity that underpins our Europe.”

The French government has previously accepted that the EU may need to agree on budget rebates for net contributors like the Netherlands to build support for the plan.

The European Commission proposal would channel money to those countries most affected by the economic effects of the coronavirus, with as much as 500 billion euros available as grants and 250 billion euros in loans. The program, which needs to win the backing of every capital, would be funded by joint debt issuance in a significant step toward closer economic integration.

Budget Rebates

The Netherlands, along with Denmark and Sweden which have also voiced opposition to the plan, received reductions in their contributions to the 2014-2020 budget of more than 1 billion euros in total and those rebates won’t automatically carry over into the next budget, which needs to be finalized this year.

The Danish government has indicated that its top priority will be to maintain the rebate rather than win changes to the recovery plan.

France has been emphasizing the importance of making much of the funding available as grants, rather than loans, to help shield national finances from the impact of the pandemic. Macron has also insisted that the conditions attached to the handouts should be nothing like the onerous terms demanded for bailouts during the debt crisis.

Macron and Merkel will meet at the Meseberg castle, North of Berlin, on Monday to discuss the EU’s recovery plan, climate change, health issues and other topics, according to a statement from the Elysee. Last month, the two leaders jumpstarted the push for a recovery fund by proposaing at least 500 billion euros of common grants to put the European economy back on track.

©2020 Bloomberg L.P.

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