For weeks, the EU Commission, the European Parliament and the member states have been struggling to bring forward a major Corona aid package. At the end of April, after extensive negotiations, an initial 540 billion euros safety net has been agreed upon. However, this only provides for guarantees and favourable credit lines via the European Stability Mechanism and the European Investment Bank, which are available, for example, for corporate loans, the financing of expenditures in the health sector or the funding of short-time labour schemes (European Council, 2020).
The current proposals for a European crisis response go beyond this. Germany and France have presented plans for a growth programme of 500 billion euros, which is to support particularly affected states by means of transfer payments. Future EU budgets would then have to be used for the corresponding repayments (Matthes, 2020). However, such a sign of European solidarity is off limits for some member states. The "Frugal Four" (Austria, the Netherlands, Denmark and Sweden) would like to rely exclusively on loans. As of today, transfers are not an option for them. Moreover, aid should only be granted subject to strict verifiable conditionality (Frugal Four, 2020).
The proposal now to be negotiated at the EU Council summit on 19 June 2020 - the "Next Generation EU" programme of the EU Commission - includes both: 500 billion euros in transfers and a further 250 billion euros in loans. To this end, the Commission would like to issue its own bonds and repay them over 30 years starting 2028. The additional costs are to be financed by the contributions to the EU budget, but possibly also by new EU resources. Most payments are not to be received until 2023 (European Commission, 2020a). Therefore, the package is not going to trigger a rapid economic impulse for particularly hard-hit member states. The EU proposal rather focuses on investment-related measures. A special focus lies on countries with lower incomes and higher unemployment. Corona infection figures are apparently not included in the allocation formula: "In the Recovery and Resilience Facility, the Commission plans to take into account Member States' population, GDP per capita and unemployment figures from 2015 to 2019" (European Parliament, 2020). The resulting distribution of funds to the member states is currently discussed based on internal estimates by the Commission.