Von der Leyen calls for ‘huge’ initiative within EU budget

President says EU budget will be central to generating investment needed after coronavirus.

The next long-term EU budget should be used to trigger a trillion-euro investment initiative to aid the bloc’s economic recovery, European Commission President Ursula von der Leyen said Wednesday.

Speaking at a virtual press conference alongside European Council President Charles Michel, von der Leyen said that “we are working on the new European budget, a European budget that with all [its] might is able to leverage the necessary money for a huge investment initiative.”

Her remarks come as EU leaders consider how to finance the recovery from the coronavirus crisis, with eurozone ministers last week floating the idea of a recovery fund linked to the EU budget.

“We’re not talking about [a] billion, but we are talking about [a] trillion, looking at the investment initiative that has to be done,” von der Leyen said Wednesday, as she outlined plans that would involve using money from the EU budget to borrow on the international markets and then re-lend that money to national governments.

The president also noted that the bloc’s next long-term budget would be different from previous financial frameworks.

The long-term budget running from 2021 to 2027 “has to have a front-loading element so that at the very beginning, in the first one, two, or three years, there’s this huge investment initiative.”

“The principle — leveraging money that is guaranteed by the member states — the Commission has done before. This is a huge advantage, so it’s known territory … never, ever before at that size, but it has the mechanism, is a well-known, a trusted one and a proven one.”

EU heads of state and government will hold a “strategic discussion” on the 2021-2027 EU budget at a videoconference on April 23, Michel said, noting that the talks will feed into the Commission’s ongoing work.

The exact amount of the bill for reviving Europe’s economy still needs to be worked out, Michel said.

Last week Budget Commissioner Johannes Hahn floated the idea of lifting the limit on how much money the bloc can legally raise from member countries for the EU budget to help the Commission raise extra money in the capital markets— without necessarily increasing the size of national contributions to EU budget programs.

Similarly, Commission Vice President Valdis Dombrovskis said earlier this week that a Recovery Fund could be financed with “bonds backed by a guarantee from the member states.”