Covid-19, Economics, EU – Baltic States, Financial Services, Legislation, Markets and Companies

Ratas emphasized that EU member states must urgently reach an agreement on the economic recovery plan and the next long-term budget. "Member states and the European Union responded to the pandemic quickly and comprehensively. The closure of the world due to the fight against the coronavirus will understandably have a major impact on the economy. Our aim is to reach the best agreement quickly at the Council meeting so that we can revitalize the European economy and thus restore the well-being of our people," the prime minister said, adding that he considers it important to strengthen Europe's resilience to a possible re-emergence of the virus, accelerate economic reforms and help bring about the digital and green revolution.

According to Ratas, Estonia's main goals in the negotiations on the new EU long-term budget are related to, for example, increasing cohesion policy funding necessary for investments and reforms, continuing support for the construction of Rail Baltic and increasing direct subsidies to farmers.

"It is also important to reach an agreement on the future long-term budget and the economic recovery plan so that we can prepare for the realization of investment and reform of the new period without further delay. We have already started to develop plans to be executed with the support of the European Union in the coming years in order to create jobs and make Estonia smarter, greener, better connected, more socially cohesive and closer to the people," the prime minister said.

At the beginning of the Council, the leaders of the member states will meet with European Parliament President David Sassoli. EU leaders will then discuss the proposal for the next long-term budget and the economic recovery plan.

A meeting of the leaders of Estonia, Lithuania and Latvia will also take place before the Council to discuss common priorities in the budget negotiations.

On 10 July, following talks with state leaders, President of the European Council Charles Michel presented his proposal for the EU's multiannual financial framework and recovery package. According to this, the EU's long-term budget would be 1,074.3 billion euros. The president of the Council maintained the size of the proposal for a relaunch plan presented by the European Commission at the end of May -- 750 billion euros, of which 500 billion euros would be in the form of grants and 250 billion euros in loans.

The adoption of the budget plan requires the unanimous support of all member states and the consent of the European Parliament.

According to the European Commission's summer economic forecast published last week, the European Union's economy is expected to contract more this year and then to recover more slowly than forecast in the spring forecast. This year, the economy is expected to decline by 8.3 percent and next year GDP will grow by 5.8 percent, while in the spring forecast, the indicators were -7.4 percent and +6.1 percent, respectively. Estonia can be expected to experience an economic downturn of 7.7 percent this year and an increase of 6.2 percent next year.