Coronavirus: EU leaders extend talks on unprecedented virus recovery fund

Germany's Angela Merkel says she "still can't say" if a deal will be done, as the "Frugal Four" nations hold out.

Monday 20 July 2020 07:12, UK

A general view of the start of the European Union Council in Brussels on July 17, 2020, as the leaders of the European Union hold their first face-to-face summit over a post-virus economic rescue plan. - The EU has been plunged into a historic economic crunch by the coronavirus crisis, and EU officials have drawn up plans for a huge stimulus package to lead their countries out of lockdown. (Photo by FRANCOIS LENOIR / POOL / AFP) (Photo by FRANCOIS LENOIR/POOL/AFP via Getty Images)
Image: The EU27 leaders are meeting in Brussels
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Marathon talks among EU leaders to agree an unprecedented £1.68tn budget and coronavirus recovery fund have been extended into a third day.

The bitter negotiations have underscored the deep divides within the 27-nation bloc, with the traditional Franco-German alliance struggling to get its way.

But European Council President Charles Michel urged the leaders to make one last push on "mission impossible".

He reminded them that more than 600,000 people have died as a result of the coronavirus around the world, and it was up to them to stand together in the face of an unprecedented crisis.

"My hope is that we reach an agreement and that the headline... tomorrow is that the EU has accomplished mission impossible," Mr Michel said on Sunday night.

"That is my heartfelt wish... after three days of non-stop work."

Germany's Chancellor Angela Merkel (L) and President of the European Council Charles Michel greets prior the start of the European Union Council in Brussels on July 17, 2020, as the leaders of the European Union hold their first face-to-face summit over a post-virus economic rescue plan. - The EU has been plunged into a historic economic crunch by the coronavirus crisis, and EU officials have drawn up plans for a huge stimulus package to lead their countries out of lockdown. (Photo by STEPHANIE LECOCQ / POOL / AFP) (Photo by STEPHANIE LECOCQ/POOL/AFP via Getty Images)
Image: Germany's Angela Merkel has warned a deal might be beyond the leaders' reach

The leaders are at odds over how to carve up the recovery fund designed to help haul Europe out of its deepest recession since World War Two, and what strings to attach for countries it would benefit.

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German Chancellor Angela Merkel and French President Emmanuel Macron walked out of heated talks late on Saturday, with a group of nations led by the Netherlands pushing to limit the amount of grants given to countries whose economies have been hardest hit by COVID-19 and to impose strict conditions on how the money is spent.

"They run off in a bad mood," Dutch Prime Minister Mark Rutte said in the early hours of Sunday after Mrs Merkel and Mr Macron's departure from talks.

"The fact that we continue talking shows we all have optimism."

MILAN, ITALY - MAY 06: A man, wearing a protective face mask, walks past a shuttered barber shop on May 06, 2020 in Milan, Italy. Italy was the first country to impose a nationwide lockdown to stem the transmission of the Coronavirus (Covid-19), and its restaurants, theaters and many other businesses remain closed. (Photo by Emanuele Cremaschi/Getty Images)
Image: The EU has been thrown into its worst-ever recession

Mr Rutte is widely seen as the leader of the nations known as the Frugal Four - the Netherlands, Austria, Denmark and Sweden.

Mr Macron and Mrs Merkel met deep into the night with Italian Prime Minister Giuseppe Conte and the leader of the EU Commission, Ursula von der Leyen.

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On Sunday morning, they continued their talks along with summit host Mr Michel before the negotiations with all leaders restarted.

Polish Prime Minister Mateusz Morawiecki has said he will not agree to a proposed mechanism to freeze EU money for countries violating the rule of law.

"The positions are getting closer but not enough yet," he said on Sunday.

European Union Euro Currency banknotes with Europe map
Image: At stake is a £1.68tn budget for EU countries

The EU executive has proposed a £682bn fund, partly based on common borrowing, to be sent as loans and grants to the most needy countries.

All nations agree they need to help but the four richer nations in the north, led by the Netherlands, want strict controls on spending, while struggling southern nations such as Spain and Italy say conditions should be kept to a minimum.

Negotiations on the virus fund come on top of the huge seven-year EU budget that leaders have been haggling over for months.

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