Political fallout from the joint Franco-German...>

EU: Political fallout from the joint Franco-German proposal to have the EU raise

E500bn on the open market (see 0730BST bullet) is likely to be significant. 

- Struggling southerners such as Italy and Spain are assured that finances will

be distributed as grants from MFF. Meanwhile, promises that funds will be repaid

by member states are an attempt to get 'frugal four' states of Austria, Denmark,

Netherlands and Finland on side.

- Austrian Chancellor Sebastian Kurz has said "we expect the updated MFF to

reflect the new priorities rather than raising the ceiling". 

- Refers to the EU's 'own resource' ceiling, set at 1.26% of total EU GNI. Own

resources contribute the vast majority of the EU's revenues, which come from

member states via rates on their VAT base and overall GNI. 

- Crucially, own resource decisions require unanimity at Council level, meaning

that the leader of a single member state could scupper the entire plan should

they not be convinced of the scheme's merits. 

- United 'frugal four' could block the plan, but should group splinter it could

prove difficult for one nation to stand alone against 26 other EU states.