Chancellor Angela Merkel and President Emmanuel Macron have proposed a Franco-German initiative for European economic recovery in the wake of the COVID-19 pandemic. They advocate an ambitious 500 billion euro reconstruction fund.

The pandemic is the worst crisis that Europe has faced in its history, and a crisis on this scale calls for an appropriate response, said the Chancellor. "We must act at European level to ensure that we emerge from this crisis stronger and in a good state."

Triggering new dynamics

The economic recovery fund is to provide EU budget funds for the worst hit sectors and regions, states the Franco-German declaration. Investment is to be encouraged in particular in areas connected to environmental and digital transformation. "In this way we also intend to trigger new dynamics for the future," said Angela Merkel. The European Commission should raise this sum on the capital market and channel it to crisis-affected states as aid within the scope of the EU’s multiannual financial framework. 

Longer-term reconstruction support

"The aim is to ensure that Europe emerges from this crisis stronger, united and in a spirit of solidarity," declared Angela Merkel. Since the impacts of the coronavirus vary from state to state within Europe, cohesion within the Union is in jeopardy. This is why the fund must help all states in Europe to respond appropriately. "This will call for an exceptional one-off effort – Germany and France are willing to make this effort."

The ministers of finance had already endorsed an assistance package totalling 540 billion euros. "That was a first, remarkable step," said Angela Merkel. Now longer-term support is needed for recovery. "We need a reconstruction fund," declared the Chancellor.

Franco-German impetus

A programme of this sort would have to be approved unanimously by all 27 EU member states. But if Germany and France provide an impetus, said the Chancellor, it can help build a consensus in Europe. It is now up to the European Commission to elaborate a proposal on this basis, which can then be approved by all member states. The extended budget framework would have to be ratified by all EU member states. In Germany this would be the responsibility of the German Bundestag.

The Franco-German Initiative for the economic recovery of Europe following the coronavirus crisis provides for the following measures:

1. Strategic sovereignty in the health sector – elaboration of an EU "health strategy"
2. Establishment of an ambitious economic recovery fund at EU level to foster solidarity and growth
3. Acceleration of the Green Deal and digitalisation
4. Strengthening economic and industrial resilience and the sovereignty of the EU, while generating new impetus for the Single Market

Read the full text of the Franco-German Initiative (German) here.