The Day at a Glance | July 21 2020

The Top

· Europe reaches an agreement to finance recovery fund.

· Pelosi and Mnuchin meet to discuss new fiscal package.

· Worldwide debt reaches 331% of global GDP: IIF.

Economic environment

The European Union successfully reaches a historic agreement to finance an economic recovery fund. Negotiations extended through Tuesday morning and concluded with a consensus between member countries to issue debt collectively. The fund consists of 750 billion euros and a 1.1 trillion euro budget between 2021-2027 to reactivate the economy after the pandemic. 390 billion euros will be distributed as donations or subsidies, while the rest will be channeled to countries in the form of loans with low interests. The package also considers expenses to fight climate change, and all use of resources must be consistent with the Paris Agreement regarding the environment and the reduction of greenhouse gasses. Italy could receive up to 82 billion euros in donations and 127 billion in loans, according to preliminary calculations made by Italian officials. Conditions regarding the strengthening of democratic institutions in order to have access to funds were eliminated, and countries like Germany, Denmark, the Netherlands, Austria and Sweden will receive up to 50 billion euros in 7 years as compensation for their contributions. A new debt issuance with maturity in 2058 is being planned and will be paid with the European budget. Taxes on non-recyclable plastic waste and digital platforms are also being considered in order to increase tax revenue in the European block. European stock exchanges and the Euro have reached 4 month high levels.