Thread by @john_lichfield

Impossible to overstate importance/scale of Eur 500bn Franco-German plan to reconstruct EU regions/industries worst hit by the Covid crisis. The Marshall Plan? The Merkel/Macron Pan is THREE times bigger. More debt? Not for the recipients. The aid will come as grants. 1/10

The plan – it still has to be agreed by all 27 govts and ratified by 27 parliaments – is also a huge step for Germany and the EU. The idea is that Brussels will raise the money on international markets and then spend it over three years, doubling its present budget limit. 2/10

The money will go to all EU countries but mostly to regions and industries – from tourism to aviation to car-building – devastated by Covid lockdowns. Unlike aid given to, say, Ireland and Greece, after 2008-9 crisis, it won't come in form of loans with stringent conditions. 3/10

The long-term debt, raised by Brussels, will be guaranteed by all EU states and should therefore have very low interest rates. It will be serviced and ultimately paid off by all member states, according to their existing contributions to the EU budget. 4/10

As Prsdt Emmanuel Macron says in this interview today with Ouest France, nothing in the EU treaty specifically permits such large-scale borrowing by the European Commission. But there is nothing specifically to forbid it either. Big victory for him.
5/10
france.fr/europe/allemag…

A huge step also for Merkel - abandoning Berlin's opposition to mutualised EU debt and big transfers from “rich” north to poorer “south”. Far from being daunted by German constit. court’s doubts about previous ECB action, she has taken a leap towards a single EU economy. 6/10

Merkel opposed so-called “Coronabonds” because they would have been mutualised loans to countries in Eurozone – and specifically forbidden by EU treaties. She has accepted Merkel-Macron bonds because they would be raised by European Commission and spent through EU budget. 7/10

It remains to be seen whether frugal northern countries, NL, Finns etc, will accept this revolutionary idea. Can they refuse when Berlin has signed up? Macron in interview suggests not. This may put up northern backs.
Ita says Euros 500bn isn't enough. It wants Eur 1Tr. 8/10

To place this proposal in context…It would double EU budget for three years….The 1948 Marshall Fund – US aid to European countries devastated by 1939-45 war – was around $15bn – or $165bn/Euros150bn in today’s money. The Merkel-Macron Plan is more than three times larger. 9/10

The country which gained most from the Marshall Plan was the UK. We will, of course, be excluded from the Merkel-Macron Plan. Too bad. Tant pis. Schade.10/10