Von der Leyen’s €1.76trillion EU spending plot could be crashed as Netherlands demand veto

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European sources have said fiscally conservative governments have signalled a readiness to strike a deal at this week’s leaders’ summit in Brussels but only if the colossal spending plans are slashed in size. European Council President Charles Michel left the European Commission’s €750 billion coronavirus recovery fund untouched but cut the size of the proposed budget from €1.1 trillion to €1.07 trillion last week when he set out new plans. Finland’s prime minister Sanna Marin on Friday insisted her government wanted a “lower overall level” for the pandemic aid package and a “better balance of grants and loans”.

She is supported by the so-called “Frugal Four” of fiscally conservative governments in Austria, Sweden, Denmark and the Netherlands.

Under the blueprints put forward by Commission chief Ursula von der Leyen, the bloc would borrow €750 billion on the international markets in order to hand out €500 billion in grants and €250 billion in loans.

One key battle when leaders meet for the first time since the pandemic exploded onto the Continent will be over the way the aid is policed.

The frugal states want to play a key role in approving and distributing the grants and loans under the recovery fund.

The Netherlands, led by prime minister Mark Rutte, has asked for unanimous approval, which would in effect hand veto powers to any one country.

Mr Michel put forward plans for a system to approve the Commission’s spending decisions by a weighted vote.

Pandemic-stricken southern states, like Spain and Italy, are due to be the biggest winners from the financial package.

Madrid and Rome have pushed back against plans for a “political” system of ratifying the funds, claiming it will cause huge delays and hamper recovery efforts.

They have proposed a system where the Commission’s decisions are automatically approved unless they are overruled by a qualified majority of EU capitals.

Brussels sources are unsure whether governments will be able to broker a deal during Friday’s negotiations, which some have warned could drag on into Sunday.

Leaders have failed during multiple online summits to find a compromise in order to keep all member states happy.

An EU official said: “It became obvious deals weren’t going to be made online.

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“You need the work in the margins, bilateral and discussions between advisers to find the common ground. It needed a physical meeting”.

Diplomats have predicted a “very difficult” meeting amid fears rejection of the new EU spending plans could be the “beginning of the end” for the bloc.

Strongman Hungarian prime minister Viktor Orban has threatened to crash the negotiations over plans to attach “rule of law” strings to the funds.

“There will not be an economic restart, there will not be a budget, there will be drawn-out debates,” he warned.

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He added: “Let’s put this debate aside now.

“Let’s resolve the economic problems, start our economies, start creating jobs, then we continue the rule of law debates.”

Hungary and Poland could both be big winners from the recovery fund despite constantly flouting the bloc’s rules and frequent clashes with Brussels.

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