But so far the deal has been thwarted by deep divisions about the overall size of the recovery fund, how much assistance should be given as grants rather than loans, and the conditions that must be attached.
French President Emmanuel Macron lost his temper momentarily during the nightly talks, French officials told CNN. There was a “difficult time last night,” they said. The talks are expected to meet again on Monday for discussions that could decide the fate of the bloc.
On Sunday, Luxembourg Prime Minister Xavier Bettel said he “had rarely seen, in seven years, positions so diametrically opposed at many points” within the European Council of EU leaders.
Austria, the Netherlands, Denmark and Sweden had vehemently opposed offering € 500 billion in grants over concerns about burdening their countries with debt to finance the spending of other EU states.
Council President Charles Michel outlined what was at stake at the start of the summit on Friday. Securing an agreement was “not just about money, but about people, about the European future, about our unity,” he said.
The European Commission said earlier this month that it expects the EU economy to shrink 8.3% in 2020, considerably worse than the 7.4% drop predicted two months ago.
European Central Bank President Christine Lagarde said last week that “an ambitious and coordinated fiscal stance remains critical,” and the ECB assumes that a major deal will be approved. This, he said, must happen “quickly.”
Before the EU summit closed after overnight talks, a compromise was proposed that would reduce the proportion of grants to approximately 50% of the fund, or € 375 billion ($ 429 billion).
Speaking to reporters early Monday, Dutch Prime Minister Mark Rutte said Michel was working on a new compromise proposal. “We are not there yet, things could still fall apart. But it seems a little more hopeful than sometimes last night when I thought this was over,” Rutte said.
German Chancellor Angela Merkel said Monday that EU leaders had devised a “framework” for a possible deal.
“That is progress, and it gives us hope that there may be an agreement today or at least that it is possible,” Merkel told reporters.
That sentiment propelled markets early Monday morning with the euro rising to its highest level against the dollar since early 2019, rising 0.3% to $ 1.15. It has since been withdrawn at $ 1.14.
The EU senior leadership meeting is the first major in-person meeting of world leaders since the pandemic began.
– Julia Horowitz, Chris Liakos, Rosanne Roobeek, Pierre Bairin, Fred Pleitgen and Nadine Schmidt contributed to the reports.
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