July 10, 2020 / 11:28 AM / a month ago

FACTBOX-EU's Michel lays out compromise proposal on bloc's COVID stimulus

July 10 (Reuters) - The chair of EU leaders, Charles Michel, on Friday put forward his compromise blueprint for the bloc’s next budget and its multi-billion-euro coronavirus recovery fund in a bid to bridge divisions between the more frugal north and the more highly indebted south.

Here are the key elements of Michel’s proposal, which will be debated by the 27 national EU leaders in Brussels on July 17-18:

* EU budget for 2021-27 lowered slightly from previous proposals to 1.074 trillion euros ($1.21 trillion) to accommodate the “frugals”.

* Wealthy net contributors Austria, Germany, Sweden, Denmark and the Netherlands to keep EU budget rebates in the form of lump sum corrections to win them over to the stimulus package.

* New 5 billion euro Brexit adjustment fund to support Ireland, Belgium and other countries, regions and industries most affected by Britain’s departure from 2021.

* New EU levy on unrecycled single-use plastics from 2021, on digital transactions and carbon footprint of imports by 2023. More bloc-wide taxes - including fresh Emissions Trading Scheme revenue from aviation and maritime sectors - later on, to repay stimulus borrowing.

* Grants available to member states: 217 billion euros in 2021-22 based on unemployment, demographics and GDP levels before new coronavirus struck; another 93 billion available in 2023, based on GDP drop since the pandemic.

* A third of all EU spending to go to projects advancing fight against climate change. Access to Just Transition Fund to wean off coal only for countries committed to achieving 2050 climate neutrality.

* Three-month approval process for getting recovery funds based on criteria including hitting reform “milestones and targets” and voting by majority of EU member states.

* Recovery funds should be paid out by the end of 2026. Debt repayment to start from 2027.

* Weaker mechanism than previously proposed to ensure respect for rule of law as condition to access EU funds, but more money for European Public Prosecutor’s Office, among others.

* The EU’s current, 2014-20 budget to be increased by 11.5 billion euros to swiftly step up spending on solvency support for companies, among others. ($1 = 0.8851 euros)

Compiled by Gabriela Baczynska; Editing by Kevin Liffey

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