EU Commission chief says countries must drop ‘entrenched positions’

European Commission president Ursula von der Leyen has called for an end to "entrenched positions" to allow a joint response to the economic devastation caused by coronavirus ahead of budget talks by member states next week.

In a speech to the European Parliament, Ms von der Leyen said the EU's next seven-year budget should be a Marshall Plan, likening it to the United States' investment plan that allowed the continent to rebuild after the second World War.

Now is “the moment to put behind us the old divisions, disputes and recriminations. To come out of our entrenched positions,” Ms von der Leyen said.

Divisions between member states stalled agreement on the budget earlier this year, when the so-called Frugal Four of Austria, Denmark, the Netherlands and Sweden blocked an effort to increase EU funding to make up for the departure of Britain.

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In addition, there is now disagreement over how to fund a recovery plan for the continent to tackle the impact of the pandemic.

EU finance ministers last week agreed a package of measures, including loans for an employment guarantee scheme, from the European Investment Bank. States can also borrow from the bloc’s bailout fund, with fewer conditions than normal as long as funding is intended for healthcare purposes.

However, the ministers were unable to agree on the most contentious issue of shared debt, sometimes called euro bonds or “corona bonds”, which proponents say would bring down borrowing costs for weaker European economies and be a vital demonstration of solidarity in response to the crisis.

Nine states, including Ireland, Italy, France and Spain, have called for joint debt, but the idea is opposed by countries including the Netherlands, Germany, Finland, and Austria, where there are concerns about becoming liable for the debt of struggling economies.

National leaders

The debate is set to continue between national leaders as they discuss how to fund a recovery fund for the continent as it faces an economic slump forecast to be the worst since the Great Depression of the 1930s.

Ms von der Leyen said both an increase in the EU budget and “innovative solutions” for funding would be necessary.

”The next seven-year budget must be different to what we have imagined,” Ms von der Leyen said, adding that a huge amount of investment would be needed to rebuild the single market.

”Some regions will bounce back, and others will have a harder time. And therefore cohesion and convergence will be more important than ever before.”

The European Parliament is debating Europe’s response to the pandemic throughout Thursday and Friday, with moves by some political factions and member states to resurrect euro bonds after they were blocked in talks between finance ministers last week.

A joint draft motion supported by the main political groups in the European Parliament calls for €30 billion in joint debt guaranteed by the European budget for spending on healthcare systems.