EU recovery is 'no battle between frugal and free-spending' states, says Spain

MADRID (Reuters) - European Union leaders must reach a deal fast on a recovery fund to avoid a long and painful recession for a region shattered by the coronavirus pandemic, Spain’s foreign minister said.

Spanish Foreign Minister Arancha Gonzalez Laya reacts during an interview with Reuters at the Ministry of Foreign Affairs, in Madrid, Spain May 28, 2020. REUTERS/Susana Vera

The European Commission on Wednesday unveiled a 750 billion euro ($831 bln) plan to prop up the bloc’s economies, but it could face resistance in fiscally conservative northern nations dubbed “the frugal four”: Austria, the Netherlands, Sweden and Denmark.

Spanish Foreign Minister Arancha Gonzalez Laya told Reuters the whole region’s economy, not just those of worst-hit southern nations such as her own and Italy, was at stake.

“This is not a battle between some frugal countries, and some free-spending countries. The battle today is between a swift recovery that generates jobs or a long recession that creates pain,” she said, calling for the disbursement of some of the funds before a full EU deal can be ironed out.

“We have to be sober and act quickly.”

The Commission proposal, if ratified by all, would be a milestone in a half century of continental integration, marking a step towards mutualised debt as a major funding tool for the first time and paving the way for greater EU taxation powers.

The minister was optimistic a deal could be found.

“In two months we have completely changed the dynamics in Europe,” she said.

Gonzalez Laya said the car sector, along with tourism and renewables, would be priorities for Spain when it comes to using this fund. The first two are hard hit by the crisis and the latter is a government priority.

The minister, a former senior official at the World Trade Organisation and the European Commission, joined the new minority government led by the Socialist Pedro Sanchez in January.

“Spain does not fear reforms, Spain is already doing reforms,” she said.

Reporting by Belén Carreño and Ingrid Melander; Editing by Andrew Cawthorne