The European Union finance ministers have agreed in principle to allocate half a trillion euros to support European economies hit hard by the coronavirus pandemic, but have not specified the way the recovery will be funded at a time when all member states are heading for deep recession.

According to Eurogroup President Mario Centeno, the agreement is based on three pillars: First, the support of workers with a € 100 billion package that the European Commission will give to the member states. Secondly, the support of companies, with loans of 200 billion euros from the European Investment Bank. Third, the support of member states with credit lines from the European Stability Mechanism, which corresponds to 2% of each country’s GDP.

The agreement does not explicitly state that a common debt will be issued to finance the recovery – something that Italy, France and Spain are asking for, but it is a red line for Germany, the Netherlands, Finland and Austria.

The leaders of the 27 states will decide whether to use “innovative financial instruments”, a statement that announces other tough and tense negotiations.

“The decision reached by the Eurogroup should be the starting point of even more ambitious – in the future – European initiatives on dealing with the effects of coronavirus, but also the return to normality,” said Finance Minister Christos Staikouras.