Too little, too late! ECB chief berates EU leaders over coronavirus response

Christine Lagarde said the European Union’s economy could shrink up to 15 percent as a result of slow decision-making while leaders squabble over how best to respond to the crisis. She made the stark warning today at the fourth virtual summit of EU leaders to decide on the bloc’s response to the economic impact of coronavirus. They were told the EU’s GDP could slump between nine and 15 percent depending on leaders’ decisions, Brussels sources claimed.

Prime ministers and presidents across the continent have been forced to shut down large swathes of their economies to halt the spread of coronavirus.

Their efforts to protect public health, however, has sent the EU hurtling to its worst recession in living memory.

With the eurozone in danger, leaders have failed to reach an agreement on how best to fund the recovery process, which is likely to run into the trillions of euros.

Ursula von der Leyen, the EU Commission’s president, will call on member states to sign up to her €2trillion rescue package.

She wants to use the EU’s next seven-year budget to delivery the recovery war chest to needy member states.

Her plan would see the multi-annual financial framework topped up by a series of new financing mechanisms that would be established at a later date.

An internal dossier, seen by, said: “All told, the new proposals will be able to generate at least 2000 billion of investment and expenditure; heavily front-loaded and geared at recovery and resilience.”

The strategy will be floated at the leaders summit as they prepare a bloc-wide response to the global pandemic.

Under Mrs von der Leyen’s plans, the EU would incorporate a €300 billion recovery fund into the 2021-2027 budget and then borrow a further €320billion.

The Commission wants to use at least half of the funds to offer loans to member states while the remaining cash will be stored inside the budget to fund annual interest bills of around €500million.

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Eurocrats also want to “front load” a number of budget components to make the majority of the funds available within at least two years.

At least €50billion from the bloc’s cohesion funds have been ring-fenced for that period.

However, it is far from certain the compromise plan will garner the support of European leaders.

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Senior EU officials believe it could take until June or July before any strategy involving the budget is agreed.

One source said: “Things are moving but so far choices have not been made.

“There is a bit of distrust because there are some countries that fear they will have to pay the debt of other countries.”

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