A Pandemic Recovery Plan intended to help European countries worst hit by COVID-19 is in progress. However, any failure that throws a spanner in the works could put Southern Europe bond spreads under renewed pressure and result in the euro losing ground. Investors in financials and especially banks will be disappointed should the EU fail to implement a coherent recovery plan.
On 19 June, the European Council’s first meeting to discuss the European Commission’s Pandemic Recovery Plan broke up in an impasse. The Recovery Plan forms part of the Commission’s budget or the 2021-27 Multiannual Financial Framework (MFF, Figure 1).