Economy of the European Union

The European Commission will on Wednesday unveil a plan to help the EU economy recover from its coronavirus slump with a mix of grants, loans and guarantees exceeding 1 trillion euros that raised controversy even before it was announced.

The European Central Bank (ECB) is drafting contingency plans to carry out its multi-trillion bond-buying program without the Bundesbank in case Germany's top court forces the main participant in the scheme to quit, four sources told Reuters.

The coronavirus pandemic has amplified existing vulnerabilities of the financial sector and eurozone banks are likely to face significant losses, the European Central Bank said on Tuesday. 

The European Commission will issue on Wednesday a new proposal for a long-term European Union budget and a coronavirus recovery fund to help economies in the bloc rebound from recession.

The crisis from the coronavirus pandemic is expected to constitute no more than a transitional shock for the Greek economy, estimates Moody's, stressing that the country's credit profile continues to be on an improvement course even though this was interrupted by the Covid-19 lockdown.

The European Commission this week noted Greece's low productivity growth rate, at a time when there is a need for high investment.

The European Commission gave Athens some much needed fiscal leeway on Wednesday, as in its sixth enhanced surveillance report on Greece it recommended the disbursement of the earnings of eurozone central banks from Greek bond holdings.

The European Union signaled Wednesday that it will not punish member countries for breaking the bloc's deficit rules to tackle the coronavirus but that it could condition their access to sorely-needed recovery funds on them following its advice on how to manage their budgets.

The European Commission will present a pandemic recovery plan next week that will exceed 1 trillion euros in a mix of grants and loans, Executive Vice President Valdis Dombrovskis said on Tuesday.

Dombrovskis, speaking after a meeting of EU finance ministers, welcomed a proposal by France and Germany for a 500 billion euro fund to disburse grants to worst-hit regions and sectors.

The leaders of Germany and France proposed Monday a 500 billion-euro ($543 billion) recovery fund for European economies hit by pandemic.

In a joint statement, German Chancellor Angela Merkel and French President Emmanuel Macron said the proposed fund would see European Union budget expenditure used to help sectors and regions that are particularly affected by the outbreak.