Ireland will argue for a recalculation of how funds are to be distributed across the European Union in a planned financial package aimed to counter the economic damage of the coronavirus pandemic, in the hopes of securing a more generous deal.
The 27 national leaders are gathering over video conference on Friday to discuss the proposals, which foresee the European Commission borrowing money to dole out to member states through emergency grants and loans.
The package aims to give the most help to the countries worst affected by the crisis, such as Italy and Spain, and draft calculations show that Ireland is set to receive a relatively slim slice of the pie.
According to a breakdown of figures in circulation in Brussels, if the current package is agreed, Ireland would be in line for €1.9 billion in grants, which would be issued to fund specific stimulus and reform projects, and would be jointly repaid later by the whole EU.
In addition, a variable level of other grants and about €1 billion in loans would also be available, amounting to an overall recovery package of roughly €3 billion.
Contributions
But Ireland will also have to pay into the common EU budget, and the overall balance between contributions and help is unfair in its current form, the Irish Government believes.
Taoiseach Leo Varadkar is expected to argue that the method of calculating the need of EU member states should be changed. A significant part of the calculation is based on economic growth and employment during recent years, meaning Ireland's past strong performance works against it.
Ireland, along with other member states including Belgium and the Netherlands, believes the calculation should not be based on historical economic performance but on estimates of how much the pandemic specifically has hit countries, officials said.
“The current plan rolls together the investment gap there was before corona, and the corona effect,” an EU diplomat said.
As an open and international trading economic, Ireland is vulnerable to global trade shocks. The economy is forecast to shrink by between 6.8 per cent and 8.7 per cent this year, according to June estimates by the Organisation for Economic Co-operation and Development, slightly below the average hit forecast across the group of rich nations.
Economic shock
Ireland and Belgium, whose close trading relationships with Britain make them among the most exposed to an additional economic shock at the end of the post-Brexit transitional period on January 1st, are both requesting that the impact of Brexit be taken into account in how money is allocated between states in the next common EU budget.
The European Commission unveiled plans for the €750 billion recovery fund and EU budget at the end of May, and Friday’s video conference is the first time national leaders have gathered to discuss the proposals and exchange their positions. They are not expected to sign off on anything yet.
Most EU member states believe that a physical summit will be necessary to forge consensus on the issue, and hope to seal the deal at a conference held in Brussels in July if the health situation permits it.
