Thursday, July 29

US calls on EU to maintain public support to shore up recovery

Joe Biden continues to lead the way. The return of the United States to multilateralism is being decisive for the possibility of meeting the climate objectives agreed in Paris, but also for the introduction of a global minimum tax for large companies. And this Monday, in Brussels, before the European Finance Ministers, the US Treasury Secretary, Janet Yellen, has called on the EU not to loosen in the fiscal support provided for a year to overcome the economic, health and social crisis of the coronavirus, and whose star instrument, the Next Generation EU funds, will be launched in the coming weeks.

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Yellen has asked to keep the spending tap open throughout this year and the next, something that is planned, but has even talked about strengthening fiscal support, that is, a public economic support, to avoid an unequal exit from the crisis.

“In the European Union, the fiscal response to the crisis has been decisive and unprecedented,” Yellen told ministers, according to a US Treasury statement, “both at the level of the Member States and the EU. And the ECB has also responded quickly and forcefully, with a series of actions that managed to contain risk premiums and helped preserve favorable financial conditions.”

Yellen acknowledged that “uncertainty remains high”, so “it is important that the fiscal position remains supportive until 2022. Looking ahead, it is important that Member States seriously consider additional fiscal measures to ensure a national recovery. and strong global, with a lasting European recovery that benefits all EU citizens. ”

The head of the US Treasury understands that “an essential part of the lasting recovery is the creation of an EU fiscal framework with sufficient flexibility to allow countries to respond vigorously to crises and invest in sustainable infrastructure: research, development and technology to tackling the climate crisis. But also other areas that can foster economic convergence and inclusive growth. The fiscal framework must support an economy of the future. ”

The chairman of the Eurogroup and Irish Finance Minister, Paschal Donohoe, said after the meeting: “We agree that the efforts of this pandemic are far from over. We still need to vaccinate more, deal with the variants. Although the situation is much better. that a year ago, we cannot be complacent. Yellen’s comments are the same that we have made before: that we must continue with the support during 2022. The spirit of what Yellen said is compatible with the Eurogroup consensus ”

In any case, the United States warns that “providing fiscal support to rescue economies and invest in an inclusive recovery does not mean setting aside caution.” For this reason, because he believes that “long-term fiscal sustainability is of vital importance,” he calls for work to implement a global minimum tax of at least 15%, in line with the recent commitment of the G20: “We hope that everyone EU member states join the consensus and for the European Union to move forward on this issue. We need sustainable sources of income that do not depend on further taxing workers’ wages and exacerbating economic disparities that we all want to reduce. We need to end to large companies transferring profits to low-tax countries, and to accounting tricks that keep them from paying their share. ”

Unlocking of the first 9,000 million for Spain

This Tuesday, the EU Finance Ministers (Ecofin) are expected to give the last go-ahead to the Spanish recovery plan for the EU’s anti-crisis fund (Next Generation EU), which means unlocking the first 9,000 million of the advance, which should arrive in the next few weeks.

The Spanish plan already has the endorsement of the European Commission and is expected to receive the approval of the ministers along with 11 other national plans, such as those of France, Italy and Germany.

However, there are countries, such as the Netherlands, that would have liked to see “more definition” in some of Spain’s reforms, such as the labor market or pension reforms, which are pending social dialogue, diplomatic sources explained to Efe. However, there are no obstacles to approval of the plan.

Once the approval of Ecofin has been received, there will still be a final formal step, the signing of the financial agreement between Madrid and Brussels, so that the advance of 9,000 million is unblocked. The community executive assumes that this will happen before the end of July, although government sources point out that the processing and verification may take several weeks so they do not rule out that it could leave until August, reports Efe.

After the advance begins to circulate, Spain may formally request the next disbursement, of about 10,000 million, which will foreseeably arrive before the end of the year because the Government does not expect problems for its processing either, since these are objectives set until July 2021, already seen with the Commission.

Spain is responsible for about 140,000 million of the recovery fund of 750,000 million of the EU. For the moment, the Government has only requested the 69,500 million that will arrive in the form of transfers, and has left the part of loans for later.

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