Blumel from Austria is confident that the EU’s covid funds will continue despite the German court

LONDON – The Austrian Chief Financial Officer believes there is no cause for concern about the EU’s recovery funds as investors are increasingly wary of a slowdown in much-needed post-pandemic cash.

The EU agreed in July to tap into the financial markets in search of 750 billion euros ($ 898 billion) to distribute among the 27 countries and support their economies after the coronavirus shock. However, in order to receive these funds, countries have had to indicate how they will use them – a process that has not yet been completed.

In addition, the German constitutional court threw a curveball at the trial. Last month, it voiced its doubts and effectively halted necessary legislative steps in Germany before the funds could be released.

“We have, of course, closely followed the developments of the court ruling in Germany. To some extent they determine what many critics say there is a danger of implementing temporary measures in a permanent way,” said Gernot BlümeI, the Minister of Justice. Austria’s finance, CNBC told Friday.

The German court acted after a group called the Citizens’ Will Alliance complained that the EU treaties did not allow the bloc to jointly take on debt. The German judges said the federal government must ensure that borrowing at EU level “does not become a permanent solution” – an opinion shared by Austria.

“I can understand what the German court said and in some parts I agree,” he said, adding that Austria is “a little more skeptical about a permanent mutual distribution of debts within the European Union” in compared to France and Germany. .

“That’s not what the Union is for. And we have now taken crisis response measures. But by (its) definition, a crisis is a temporary situation, so the measures we have taken to combat this crisis also have a temporary motive,” BlümeI said. Friday at CNBC’s “Squawk Box Europe”.

Another element is needed before the money can be released: all EU Member States must complete the ratification process in their national parliaments. Austria is one of 10 EU countries that has yet to do that and without it the EU cannot tap into debt markets.

“I am convinced that there will be no delay in issuing those European bonds as well, as it is an important measure to revitalize the European economy,” said the Austrian financial director when asked why his country had not yet taken this step.

“We have agreed on those measures, Austria is putting a large part of EUR 12 billion into this pot and we are doing this because we think it is the right way to increase growth in the European market, because all the citizens of Europe are there. will benefit, ”he added.

Austria, like other EU countries, has struggled to quickly bring Covid-19 vaccines to its citizens.

But Chancellor Sebastian Kurz confirmed last weekend that negotiations to buy Russia’s Sputnik V vaccine had been concluded, even though this shot has not yet been approved by the European Medicines Agency.

BlümeI said Austria had followed the rules and was “trying to get more doses for vaccination just to restore the economy faster and give people back their freedom”.

“I don’t see anything wrong with this,” he said.

A few eastern EU countries, such as Hungary, have decided to go beyond the agreements negotiated by the European Commission to purchase more vaccines themselves, even if they have not received medical approval throughout the bloc.

Speaking with CNBC, BlümeI said he is optimistic that in the next two to three months, Austria will have vaccinated all of its adult population who want to receive a vaccine.