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(11 June 2020) - It will be “very difficult” to reach an agreement on the recovery fund and the EU’s overall seven-year budget by July, as intended, given the disagreements over the size, the distribution of the stimulus and the attached conditions, EU officials and national diplomats acknowledged yesterday.

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The updated Multi-annual Financial Framework (MFF) and the recovery fund have been especially questioned by the Netherlands and Austria, as well as Eastern countries like Hungary. An EU official, however, pointed out that every member state has raised some “issues”, as everybody is trying to maximise their interests.

The main bones of contention are the size of the fund, the distribution between loans and non-refundable grants (a total of €500 billion is foreseen in the Commission proposal); and the distribution key for allocating the money. The capitals also disagree over the conditionality attached to unlock the funds via national recovery plans they should put forward.

Part of the difficulty lies in the immense amount of information that the capitals must digest. The package put forward by the Commission two weeks ago includes 22 proposals, covering expenditure plans for all major EU policies, including the massive envelopes of the Common Agricultural Policy or Cohesion.

If a political agreement is signed by next month, there would be sufficient time to complete the national ratification procedures in the 27 member states in the second half of the year, so money could start flowing to the hard-hit regions early next year.

Despite the major obstacles, the willingness to reach an agreement as soon as possible is widespread. “Although there remain differences between various nations that are not small, I have the impression that everyone has the will to reach an agreement within a short time,” said Germany’s Finance Minister Olaf Scholz. (EurActiv)

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