With economic stability being assured in the European Union amidst the Coronavirus global pandemic, will investors follow suit? Europe’s leaders hope so.
This as the region’s stock markets reacted positively last week to the €750 billion landmark recovery deal.
Among the gainers is Italy’s FTSE MIB which ended on a high note at 0.49% higher after the announcement of the deal. Spain’s IBEX also reacted positively with a marginal 0.2% closing.
Both Italy and Spain are among the most hard-hit countries in the EU and are likely to gain the most from the Coronavirus recovery plan.
The highest gainer among the European markets last week was Germany’s DAX which closed at 0.9%percent higher in the index, a report noted.
Even London’s FTSE 100 benefitted from the multi-billion euro recovery package scoring 34.42 points to 6,295.94 in the early hours of trading.
The region’s currency, the Euro also was at its strongest against the US dollar since January 2019 as it rose to $1.1497 as the EU stimulus package announcement was made.
What have European Union leaders agreed?
After four days and nights of tense and complex negotiations, EU leaders agreed on a historic plan to jointly borrow €750 billion to respond to the pandemic.
The EU’s pandemic recovery plan is composed of €390 billion in the form of grants while €360 billion will be distributed in the form of loans.
The recovery package will be added to the €1.074 trillion budget of the 27-member countries bringing the total financial package to a whopping €1.82 trillion.
European Council President Charles Michel in his speech after the meeting said the negotiations and the consensus on the recovery package is ‘pivotal’ in Europe’s history.
“This is the first time in European history that we agree to borrow collectively to finance expenditure. It is also the first time that our budgetary funds are connected to our climate ambition and it is the first time our budget will be directly linked to the rule of law. I am convinced that Europe is a force for action,” Michel said.
The economic stimulus package will target the hardest-hit regions and sectors. The funds target 30% of the Multiannual Financial Framework and the Recovery Fund for fighting climate change.
All over Europe, the Covid-19 pandemic as of July 26 has already reached some 2.79 million cases with Spain (272, 421 cases), Italy (245,864 cases), and Germany (205,269 cases) having the highest number of cases among EU nations.
In terms of deaths reported, Europe has already logged 202,206 deaths with the EU’s Italy (35,102 deaths), France (30,192 deaths), and Spain (28,432 deaths).
With the pandemic recovery plan in place, Europe’s leaders are optimistic that their economies are likely to benefit from the apt response and stability promised by their recent meeting.
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