Europe News

EU won't agree on more stimulus until they can meet face-to-face, Latvia PM says

Key Points
  • The 27 heads of state have been unable to meet in person since February due to travel restrictions and strict lockdown measures to contain the spread of Covid-19.
  • The drastic actions are currently being slowly lifted across the EU, but there are currently no plans to host a new EU summit in Brussels.
  • A spokesperson for the European Council president, who chairs the EU summits in Brussels, has downplayed expectations of a breakthrough later this month.
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European response to Covid-19 is invest, invest, invest: Latvian Prime Minister

The European Union is unlikely to approve further virus-related stimulus until all leaders can meet face-to-face in Brussels, Latvia's prime minister told CNBC Thursday.

The 27-member bloc is working on a plan to raise 750 billion euros ($839 billion) on the public markets to distribute as grants and loans to those sectors greatly impacted by the coronavirus pandemic. The idea is part of wider discussions on how the EU should spend its common budget between 2021 and 2027 — an exercise that traditionally takes all-night and various meetings before pleasing all EU nations.

"I think it will take a face-to-face meeting, but that is really a question that's dependent on the path of the virus, it's not really a political decision," Krišjānis Kariņš, the prime minister of Latvia, told CNBC's "Squawk Box Europe" Thursday.

The 27 heads of state have been unable to meet in person since February due to travel restrictions and strict lockdown measures to contain the spread of Covid-19. The drastic actions are currently being slowly lifted across the EU, but there are currently no plans to host a new EU summit in Brussels.

A spokesperson for the European Council president, who chairs the EU summits in Brussels, has downplayed expectations of a breakthrough later this month.

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Latvia's Covid-19 track and trace app being well accepted, prime minister says

EU leaders will convene once again via videoconference on June 19. "This will be a thorough preparation for a next summit at a later date which should if possible be a physical meeting," the spokesperson said Wednesday on Twitter.

At least four out of the 27 countries are reluctant to tap the markets together via the European Commission, the executive arm of the EU. They fear that this will unfairly burden their taxpayers.

At the same time, there are also divisions on how to distribute the money.

The proposal needs the greenlight from every country in order to be implemented.

"Right now, I think a lot is up to individual governments and collective governments," Kariņš told CNBC, when asked about how much support the European Central Bank should provide.

The ECB is currently buying government bonds to keep borrowing costs lower across the region. The central bank is due to meet Thursday and analysts expect it to prolong its market intervention to further mitigate the impact of the virus.

"It looks like the European response is to invest, invest, invest quite heavily to get out of this crisis," Kariņš said. "The signal is really quite clear to the markets that Europe as a whole, and I think the ECB is certainly there as well, we are looking to get money back into the economy."

The EU has so far made available 540 billion euros in unemployment schemes, loans to member states and other support to businesses. This is in addition to what the individual governments are doing to prop up their economies.