EU recovery deal offers hope for stability

Significance

The recovery fund will consist of loans worth EUR360bn and grants worth EUR390bn that will be financed by European Commission borrowing. The main objective is to provide additional stimulus on top of national recovery programmes. Italy and Spain will be the largest beneficiaries of the fund.

Impacts

• The implementation of the fund looks set to be slower in Italy and Spain, given their poor track records for the deployment of EU resources.
• A successful agreement would strengthen unity and trust among the member states, upon which cooperation in other areas could be easier.
• A wider pan-European bond market could attract more international attention to the euro as a reserve currency.