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Germany passes 750-bn-euro EU virus recovery fund

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German Chancellor Angela Merkel accepts her vote after being re-elected as chancellor during a session of the German lower house of parliament Bundestag in Berlin, Germany. PHOTO: Reuters

German lawmakers on Friday approved a massive 750-billion-euro ($885-billion) EU coronavirus recovery fund, breaking a taboo against pooled debt to get the bloc back on the road to growth.

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After the lower house of parliament approved the fund on Thursday, the upper house Bundesrat passed it on Friday.

The massive fund is part of a 1.8-trillion-euro budget up to 2027 agreed by the EU’s 27 members in December.

“The vote is a clear signal for European solidarity and strength,” said Finance Minister Olaf Scholz, stressing that it was in Germany’s interest that the entire bloc emerged strong from the crisis.

“A powerful recovery in Europe is an important prerequisite for Germany’s own economic success and prosperity,” he said.

President Frank-Walter Steinmeier would finish the formal ratification process when he signs the document.

Germany’s far-right AfD party has however vowed to file a challenge at the constitutional court, which might delay Steinmeier’s signing.

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Chancellor Angela Merkel sketched out the fund along with French President Emmanuel Macron in May.

The move to offer outright grants to EU countries hit hardest by the pandemic, such as Italy, smashed long-held stereotypes of Germany as a “frugal” country staunchly opposed to taking responsibility for others’ debt.

But faced with a pandemic which spared no one, Europe’s biggest economy crossed several red lines to pull itself out of a crippling recession.

It also suspended a constitutional rule that blocks the government from incurring new debt for 2020 and 2021.

Berlin, which intends to borrow a record 240.2 billion euros in 2021, is now seeking a halt to the no-new-borrowings rule for a third consecutive year in 2022.

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