Hello and thanks for joining the special edition of Thoughts in the Market.

I'm Andrew Sheets, Chief Cross Asset Strategy for Morgan Stanley research.

And I am Graza Morratum and Chief Economic Advisor to Morgan Stanley.

Today we'll be talking about the proposed EU Recovery Fund, some of the key debates facing

policymakers, and how investors are viewing the proposal.

We're recording this on Friday at 2 p.m. in London.

Resa, just to catch listeners up to speed, maybe you can start by covering a few high

points of the 750 billion euro recovery fund that's been proposed.

First of all, it is I think a both political and economically significant step.

It is politically significant because it's a strong signal of solidarity in Europe.

The countries with stronger fundamentals with financial muscles such as Germany are prepared to help countries that have been more

severely impacted by COVID-19 and whose economic fundamentals are weaker.

Let me give a few details how does it work.

Essentially the EU countries enable the European Commission to issue 750 billion of long-term AAA rated bonds.

That is just over 5% of the EU GDP. They will then distribute this to member states. About 500 of it will go to grants,

so it doesn't have to be paid back and about 250 billion of it goes in form of loans.

The bulk of the funds, and this is where the economic significance comes through, the bulk of the funds will go to the regions and the sectors that have been affected adversely by COVID-19.

And some of the funds will be used to invest in green and digital priorities

across the EU.

So this idea of Europe coming together, Europe using its joint fiscal power to help weaker regions.

You know, this has been something people have been talking about for a long time, about

something that would really help and stabilize the European Economic Project.

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