rtmark
LearnBonds.com

Europe plans to raise €750bn from money markets to rebuild after pandemic

Brussels said it plans to borrow €750bn ($826bn, £671bn) on international markets to finance the region’s economic recovery from the coronavirus pandemic, the European Commission (EC) president said on Wednesday.

Ursula von der Leyen (pictured) also told the European Parliament she wants a far larger European Union budget of €1.1trn over the next seven years for a revival of the bloc’s shattered economy – a request that will spark tough rounds of talks between divided northern and southern European governments.

The EC plan to borrow money comes as European countries feel the deep impact of the health emergency on the continent’s economy, which is expected to shrink by 7% by the end of 2020, as a result of strict lockdowns and travel bans to contain the spread of the virus.

The plan, dubbed Next Generation EU,  would spare the balance sheets of already indebted EU members and take advantage of the commission’s AAA credit rating to raise cash on the capital markets. The debt will be repaid over 30 years after 2027.

Von der Leyen said: “Things we take for granted are being questioned. None of that can be fixed by any single country alone. This is about all of us and it is way bigger than any of us.”

The proposal is backed by two deep-pocketed EU members, Germany and France, both of which have joined forces to support a fiscal stimulus from the commission as reflected by recent announcements that pushed for at least €500bn in aid.

Germany’s prime minister Angela Merkel said rebuilding after the pandemic was the “biggest challenge in the history of the EU”.

European Central Bank President Christine Lagarde called the move “ambitious, targeted and, of course, welcome”. The central bank has also stepped in to assist in prior weeks through a €750bn program destined to buy government bonds.

Bond yields for some of the most affected EU countries, including Spain, Italy, and Portugal, have been dropping prior to the news, with 10-year bond yields sliding by 11.3, 34.9, and 20 basis points respectively since 15 May.

european bond yields

This announcement is only the first step towards what could be a complex debate, as all 27 member countries that constitute the European Union must approve the rescue package, along with the European Parliament.

The proposal is likely to encounter opposition from at least four key northern European countries within the Eurozone – Austria, the Netherlands, Sweden, and Denmark – all of which have opposed to this sort of bailout unless there’s a strong commitment towards implementing stronger structural economic reforms within the region.

EU members will be meeting on 18 June to discuss the plan.

Trusted & Regulated Stock & CFD Brokers

Rating

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

Rating

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.