Last night, the European leaders agreed to pass a historic stimulus of €750 billion euros ($858 billion dollars). The recovery fund’s goal is to rebuild the EU economies ravaged by COVID-19.
The European Commission plans to raise the money in the financial markets, rather than injecting new money into the system. Approximately half the funds required (€390 billion euros) will be granted to the hardest hit EU states, while the rest will be provided as loans, to be repaid by 2058. The EU also agreed on a budget for the bloc of an additional €1.1 trillion ($1.3 trillion) for 2021-2027.
- Help businesses rebound from the pandemic
- Reform the EU economies in the long haul
- Invest to protect against against “future crises”
According to the text of the agreement, approximately one third of the funds are earmarked for climate change, constituting the biggest green package in history. All expenditures in the stimulus must further the goal of cutting greenhouse gasses, consistent with the Paris Agreement.
The EU continues to battle a recession triggered by COVID-19, with Italy and Spain hit the hardest. The EU economy is expected to shrink 8.3% in 2020.
The entire recovery effort amounts to almost 2% of the EU’s GDP. This may seem hefty, but the American stimulus efforts have already amounted to 14.3% of U.S. GDP, with the public awaiting a second stimulus announcement any minute.
There was considerable debate between the EU leaders as to the size of the recovery deal, particularly as tension continues between the better-off countries and those that are struggling. French President Emmanuel Macron called the deal a “historic day for Europe.”
As the announcement came in, Bitcoin finally moved after over 6 weeks of stability, gaining 2.5% in less than 24 hours, briefly pushing above $9400.
As the economy becomes increasingly unstable in the U.S. and in Europe, and black markets continue to form around fiat currencies in Lebanon and Nigeria, it appears more and more investors continue to choose Bitcoin as a “flight-to-safety” asset.