Moment of truth as EU leaders seek COVID-19 funding deal

European Union (EU) leaders are meeting in their first face-to-face summit since the coronavirus (COVID-19) crisis, with low expectations of a deal on a €750bn (£670bn) post-Covid stimulus package.

The mask-wearing leaders, who met with elbow bumps not handshakes, must also agree a seven-year, €1.07tn budget.

French President Emmanuel Macron said it was a “moment of truth” for Europe.

There are splits between leaders over whether the post-Covid package should be given as grants or loans.

Mr Macron and German Chancellor Angela Merkel want grants to mostly finance the fund. Four northern nations insist on loans.

Arriving for the talks in Brussels, Mrs Merkel said “the differences are very very big and I cannot say if we will find a solution this time”.

It would be desirable, she said, but people had to remain realistic.

Other leaders gave her and Portuguese Prime Minister Antonio Costa birthday gifts – however, the good-natured scenes inside the summit come after weeks of squabbling over the rescue package.

The meeting is due to continue on Saturday but EU leaders may need longer to reach a deal.

“The stakes couldn’t be higher,” European Commission President Ursula von der Leyen said ahead of the meeting. “The whole world is watching us.”

Greek Prime Minister Kyriakos Mitsotakis said nobody should lose sight of the big picture – “we’re faced with the biggest economic depression since the Second World War”.

But Dutch Prime Minister Mark Rutte, whose country is part of the so-called “Frugal Four” northern states, said he “put the chances of getting a deal this weekend at less than 50 per cent”.

Southern states including Italy and Spain want an urgent decision “not weakened by a lesser compromise”, in the words of Italian Prime Minister Giuseppe Conte.

They need to revive economies battered by a devastating pandemic that claimed 35,000 lives in Italy and a further 28,400 in Spain.

The Frankfurt-based European Central Bank has already forecast an 8.7 per cent slump in the eurozone economy this year because of the pandemic. But economies that only recently pulled out of a financial crisis want grants rather than taking on further debt.

The recovery plan, backed by France and Germany, for €500bn in grants and subsidies and €250bn in loans, is being resisted by several “frugal” Northern European countries, led by the Netherlands. -BBC

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