Ireland will receive some €1.3 billion as part of the EU’s Covid-19 response in the next two years plus a significant share of a special €5 billion fund to repair the economic damage caused by Brexit, officials said, as Irish and EU leaders hailed the “unprecedented” deal reached early on Tuesday morning in Brussels.
The agreement struck by EU leaders after four days of intensive negotiations, will see the EU spend €750 billion as a once-off response to the pandemic but also settles the EU budget for the next seven years, the first without the UK’s contribution.
The €750-billion Covid response, to be allocated to member states in both grants and loans will be funded by joint EU borrowing for the first time, in what has been seen as a historic step forward in the bloc.
The Republic is in line for €1.3 billion in grants in 2021 and 2022, and an additional amount in 2023 that will depend in size on the impact of the pandemic.
Ireland also helped secure a €5 billion reserve fund for sectors and countries worst hit by Brexit in the negotiations, and an increase of the national cut of customs duties collected that will help pay for increased infrastructure at ports. There are also a number of smaller funds to which Ireland can apply for assistance.
Collective action
“The agreement reached is unprecedented in terms of the European Union collectively borrowing for the first time ever to respond to a global pandemic of this scale,” Taoiseach Micheál Martin told the Dáil shortly after his return from Brussels.
Farming groups and some Opposition TDs, including Sinn Féin leader Mary Lou McDonald and agriculture spokesman Matt Carthy, criticised the reduction in the size of the EU’s agriculture budget due the UK’s departure, but Mr Martin insisted that Irish farmers were being protected.
France and Germany had originally proposed a €500 billion fund to be used for grants to the hardest-hit member states, but this proposal was fiercely resisted by a number of “frugal” northern member states. In the end a package of €750 billion, including €390 billion and grants and €360 billion in loans, was concluded after four days and nights of sometimes fractious negotiations between EU leaders in Brussels.
The joint borrowing by the EU has been seen as a watershed. Because the package will be funded by borrowing, there will be no upfront contributions required by member states. However, Ireland will remain a net contributor to the overall EU budget, paying in more than it receives.
Resilience test
Financial markets rallied and the euro rose in value as the deal was announced after a near-record marathon of over 90 hours of day and night talks, in what was seen as a resilience test for the EU’s ability to respond to crises.
German economy minister Peter Altmaier said the size of the programme, agreed with unusual speed after having been initially proposed in May, increased the prospects of a rebound in EU economies shuttered by the pandemic.
“The chance that we’ll experience a cautious, slow recovery in the second half of the year, from around the end of October, has enormously increased,” Mr Altmaier told reporters.
Some items on the budget including health and epidemic preparedness funding, climate transition subsidies, business investment incentives and research funding were not as large as had been hoped.
Member states were forced to agree on cutbacks to reflect the loss of Britain’s contribution to the budget and the demands for a more thrifty EU by a group of northern states led by the Netherlands.
