Recovery package

The new wave of COVID-19 cases has increased uncertainty about economic recovery in the EU.

In its Summer Economic Forecast report on July 7, the European Commission lowered its forecast for economic growth in the next two years for the 19-member eurozone and 27-member EU economy.

It predicted the EU economy would shrink by 8.3 percent and eurozone economy by 8.7 percent this year, compared with respective figures of 7.4 percent and 7.7 percent in the spring forecast in early May.

European Commission Executive Vice-President Valdis Dombrovskis indicated that the economic impact of lockdowns had been more severe than initially expected.

"We continue to navigate in stormy waters and face many risks, including another major wave of infections," the former Latvian prime minister said.

Italy, Spain and France, the three largest EU economies after Germany, are forecast to see the worst economic recession among eurozone members.

On Tuesday, EU leaders reached a deal on a 1.82 trillion euro recovery package after four days and nights of negotiations. The meeting had been scheduled to last two days.

The package comprises 1.07 trillion euros from the EU's long-term budget, known as the 2021-27 Multiannual Financial Framework, and 750 billion euros to be raised from the financial market, making it the largest joint borrowing in the bloc's history.

As a result of the compromise reached with the so-called Frugal Four－the Netherlands, Austria, Sweden and Denmark－plus Finland, the 750 billion euros portion will comprise 390 billion euros worth of grants and 360 billion euros in loans, instead of the previous respective figures of 500 billion euros and 250 billion euros.

The deal must be approved by the European Parliament by the end of this year.

European Council President Charles Michel told Members of the European Parliament, or MEPs, on Thursday that the agreement is "of course a deal which covers financial matters".