Charles Michel. Image Source: IANS News

Brussels, July 11 : European Council President Charles Michel presented a revised proposal that includes a minor reduction to the European Union's (EU) seven-year budget in a bid to secure the green light for his fresh wide-ranging plan to revive the European economy.

The aim of the reduction, from 1.1 trillion euros (US $1.24 trillion) to 1.074 trillion, is to try to appease the Netherlands, Sweden, Denmark and Austria, which were harsh in their criticism of the previous package.

A document said the new proposal was made "on the basis of extensive consultations" held between Michel and the heads of state and government of the member states, and it "presents a balanced solution catering for the interests and positions of all member states," Xinhua news agency reported.

A week before EU leaders gather for their first physical meeting since the beginning of the coronavirus crisis, Michel told a press conference on Friday that he was "optimistic" that they will accept the new package.

The package he presented combines the seven-year budget -- formally known as the Multiannual Financial Framework (MFF) -- and a coronavirus pandemic recovery plan, set at 750 billion euros to be allocated as grants and loans to the affected countries and sectors.

Presenting his new package, Michel said the goals of recovery can be summarised in three words: convergence, resilience and transformation. Through this plan, which he described as a one-off tool for an exceptional situation, he said he hoped Europe can repair the damage caused by COVID-19, reform economies and remodel societies.

Michel confirmed that countries with long-held rebates on their European contributions would continue to get them. These countries are Denmark, Germany, the Netherlands, Austria and Sweden.

He said the EU member states will be given more power on how the recovery fund would be distributed, giving member states' capitals more power over the spending plans of their neighbours.

He proposed to preserve the balance between loans, guarantees and grants to avoid over-burdening member states with high levels of debt.

Addressing concerns over repayment at the beginning of the next budget cycle and the lack of own resources that would finance reimbursement, Michel said he was proposing that repayments would start earlier in 2026, two years ahead of what was originally planned.

In June, EU leaders criticized the original package and the European Parliament made a strong case on Wednesday for an improved plan that can help European economies not only survive the current crisis but emerge strengthened and ready to face the challenges of the next years.

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