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Challenging talks on the future of the European Union's measures to support the economy during the Covid pandemic will have to wait for July, EU sources said as the bloc's leaders began their June 24-25 summit in Brussels.
Some member states want to ensure the expiry of SURE employment support and EIB emergency loans for businesses does not feed long-term unemployment, by funding workers who require new skills in the post-pandemic economy. But more fiscally conservative countries will argue current measures are worsening developing labour shortages by paying workers to stay on the sidelines, and that structural reforms and investment fuelled by the EUR750 billion NexGenerationEU package should raise potential output and lower structural unemployment over time.
"The Eurogroup will have a discussion on the fiscal stance at the July meeting - I would expect that the discussion will centre around the progressive move towards more targeted measures, while ensuring that there is no cliff edge," one EU official said.
FRUGALS WANT FOCUS ON DEBT
Countries belonging to the fiscally frugal bloc of countries – normally consisting of the Netherlands, Austria, Denmark, Sweden, and sometimes also Finland – are already stressing the need for more focus on debt sustainability and even faster reduction of public debt, given signs of a stronger-than-expected economic recovery.
EU experts charged with preparing the agendas of the ECOFIN meetings of EU finance ministers – the Economic and Finance Committee – yesterday started vetting national recovery plans submitted by member states in order to access NexGenEU cash, in a bid to secure final approval as soon as possible. All of the big countries' plans, as well as many others, have already been endorsed by the Commission over the past week.
"Once they are approved, we will be on full speed forward to recovery," said a source familiar with the EU summit preparations.
Eurogroup President Paschal Donohoe and ECB President Christine Lagarde will be present at the summit on Friday morning. A bid by France and Germany to put the idea of a 'Biden-style' summit with Russian leader Vladimir Putin on the agenda has run into resistance from other EU states.