Merkel starts promoting €500b EU recovery fund

German Chancellor Angela Merkel on Tuesday began promoting a 500-billion-euro European Union (EU) recovery fund to help the coronavirus-battered European economies and regions.

During a video conference with the prime ministers of Poland, Czech Republic, Slovakia and Hungary, Merkel presented the main points of the French-German initiative for Europe's economic recovery after the coronavirus crisis, according to the German government.

On Monday, Merkel and French President Emmanuel Macron had jointly proposed that the European Commission would borrow money on capital markets in the name of the European Union which would then be distributed as grants through the EU budget.

"We need to take action at the European level so that we emerge sound and stronger from this crisis," said Merkel on Monday.

Before a scheduled video conference of EU finance ministers, German Minister of Finance Olaf Scholz said on Tuesday that the "new 500 billion fund will enable us to ensure that Europe grows together out of the crisis and becomes stronger again."

The proposed plan has to be adopted unanimously by all 27 EU member states, and Paris and Berlin will still have to convince other member states, the Netherlands and the Scandinavian countries in particular, to support their proposal.

On Tuesday, the German ifo Institute for Economic Research welcomed the German-French initiative as an "important signal" for European capacity for action and solidarity. "The whole of Europe has an interest in supporting the countries most affected by the crisis," said ifo President Clemens Fuest.