Europe is one of those that have been badly hit by economic recession. In fact, euros lost against dollars. There are also a lot of jobs that are lost, and several companies are closing down their business. 

But right now, they’re taking the initiative to create a stimulus package, just like China and the United States. The European Commission is urging the different governments of the European Union to create a package that will put a stop to the continuing economic slowdown. Together, they can raise 200 billion euros or 256.2 billion dollars. This amount will be used to increase consumer confidence and allow dying businesses to regain their financial stability. 

What the Plan Is About

The stimulus package, which is called European Economic Recovery Plan, will be good for two years. The money that needs to be raised shall be coming from the 27 governments that form part of the European Union. Around 1.5 percent will come from the gross domestic product of the European Union, while some will be derived from the funds, European Investment Bank, and from the treasury of the respective governments. 

The stimulus package may have been brought out after the said governments also acted together to increase credit that are being extended to financial institutions and consumers. This enabled them to somehow slowly bring back the confidence of consumers and investors into the market. The plan will also be true test of strength of the European Union, which prided itself for coming up with very efficient coordination. 

The Worst-case Scenario

The stimulus package will also be the most ideal buffer for European nations, most especially that Economic Cooperation and Development, and organization that is currently based in Paris, France, believed that the economic recession today will be the worst since the early parts of the eighties. 

Another possible worst-case scenario, however, is when the European Union members will not agree completely on certain aspects of the plan. An evidence will be what happened a couple of days ago when the chancellor from Germany and the president of France decided to reject the cut on the VAT (value-added tax), even if Britain has already expressed their confirmation. The VAT now in UK will be reduced by 1.5 percent. Moreover, wealthier British nationals will have to pay more on their taxes. 

Other Things the Report Contains

The stimulus report that has been released also talked about budget deficits. Their aim is to make sure that it stays at 3 percent or lower of their GDP. Those that have lost their jobs may be able to look forward to benefits, as governments are urged to provide these to them. They can also offer guarantees to subsidies for loans to ensure that the interest rates will be kept to the minimum. 

There will also be some changes that need to be done to the respective governments. For one, red tape should be reduced, and there should be financial assistance to be extended when it comes to research and development.