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Ministers expected to agree to use Europe’s bailout fund

Eurozone finance ministers are expected to agree to use Europe’s bailout fund to help support economies stricken by the coronavirus pandemic.

However, during a video conference this afternoon they are expected to stop short of agreeing to pool European debt through so-called coronabonds, an approach favoured by a number of countries, including Ireland.

During a bad tempered video conference nearly two weeks ago, EU leaders were unable to agree on a major stimulus plan for Europe in the face of the economic battering inflicted by the pandemic.

As a result, leaders sent eurozone finance ministers back to the drawing board to come up with proposals which could command broad political support. Later today, those ministers will hold a virtual meeting to attempt a breakthrough.

What they are expected to agree is described as three legs of a stool.

Europe’s main bailout fund, the €410 billion European Stability Mechanism, will provide emergency low interest credit lines to any country that needs them.

There will only be very light conditions attached, compared to the associated austerity from the days of the euro debt crisis.

The European Investment Bank will offer up to €40bn in low cost loans for Europe’s corporate sector, small, medium and large, which has been crippled by the economic slump.

The third leg will be an offer by the European Commission to mobilise up to €100bn so that companies can keep workers on their books as long as possible, in order to ensure a swift rebound if and when the pandemic passes.

The fourth leg is the coronabond approach. It is understood that strong and principled opposition remains in the Netherlands, Germany and Austria.

However, the issue will not be banished altogether, and that may allow Italy, France and Spain to sign up to the other three legs of the stool.

Whatever happens, it is expected to be a long and difficult video conference.

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