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Varadkar warns 'historic' €500bn EU aid package has to be repaid

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Taoiseach Leo Varadkar. Picture: Collins

Taoiseach Leo Varadkar. Picture: Collins

Colin Keegan

Taoiseach Leo Varadkar. Picture: Collins

Taoiseach Leo Varadkar has hailed a "historic" €500bn financial package agreed by the EU to help member states respond to the coronavirus crisis.

But he warned it is in the form of loans and guarantees that have to be paid back.

As the Dáil debated the EU response to the coronavirus emergency, Fianna Fáil leader Micheál Martin rejected the idea "that anywhere near enough has been agreed".

Mr Varadkar said the EU reaction was initially poorly co-ordinated, but said there had now been agreement on how to respond. This includes a temporary relaxation of state aid rules that has allowed governments to assist companies.

He said it must be ensured that member states don't use state aid to give an unfair advantage to their companies. "This is something we're going to watch very closely," he added.

Mr Varadkar said the Eurogroup of countries agreed a €500bn economic package, which is to be operational from the first week in June.

However, he warned: "It should be noted that these are all loans and guarantees and are not grants, and borrowed money must be repaid."

He said that together the EU's response is more than half-a-trillion euro - "a historic-level deployment of resources to respond to an emergency of unprecedented levels".

Mr Varadkar said it was a much greater response from the EU than was seen in the financial crisis a decade ago, which was "too little, too late".

He said the EU had agreed that climate action and the digital economy should be "critical components" of the recovery.

Mr Martin said he welcomed the measures agreed at an EU summit, but added: "We reject the idea that anywhere near enough has been agreed."

He said ambitious European Central Bank proposals for how to respond to the crisis were being resisted in the German constitutional court.

Mr Martin added: "Other than the outbreak of a war there has never before been such a dramatic and rapid public health and economic shock.

"Just like every other country in Europe, Ireland does not yet really know the scale of the recovery challenge we face.

"If the member states of the union continue to block measures to develop new direct funding mechanisms then the union's contribution will continue to be economically marginal."

Separately he raised concerns over the UK's opposition to the opening of a European Union office in Belfast after Brexit amid reports that it had previously agreed to allow it.

The EU says it needs the office to help monitor the UK's implementation of the Brexit withdrawal agreement, including checks on trade between Northern Ireland and Britain.

Mr Martin said "the threat of a chaotic Brexit remains", adding London's rejection of the office "appears like a demonstration of bad faith".

Irish Independent