Eurozone: Full agreement would be a surprise – Deutsche Bank

The most important event today is the long-awaited European Council summit via videoconference, where the big question will be over how the idea of a European Recovery Fund is financed, per Deutsche Bank.

Key quotes

“Bloomberg News reported that the Commission would propose a €2 trillion plan that would in part use the bloc’s 7-year multi-annual budget with a €300bn recovery fund included, but also establish a new temporary financing mechanism that would raise up to €320bn. However, this could prove controversial given the issuance of joint debt, to which the northern member states are strongly reluctant.”

“Frankly, if we saw a full agreement today that would be a surprise but progress and something that Italy can sign up to will be the key.”

“The things to watch out for are the size, speed and structure of the fund, but he thinks joint bonds are unlikely for obvious reasons due to the Northern states current lack of desire to go down that route.”