After almost five days of tough negotiations, European Union leaders have reached a deal on a “historic” rescue package. The 750-billion-euro financial package is the largest in the bloc’s history. 

EU leaders agree to 1,8-trillion-euro package

In a bid to protect European economies from the long-term consequences of the coronavirus pandemic, the 27 EU member states have agreed to an unprecedented budget and coronavirus rescue package. A compromise was reached on Tuesday morning, after more than four days of negotiations at a special summit in Brussels. 

Altogether, the package is worth some 1,8 trillion euros - 1.074 billion euros for the bloc’s broader seven-year budget and 750 billion euros for an investment programme. The package is designed to fight the economic fallout of the coronavirus crisis and keep the EU internal market together. At the same time, investments are to be put into making Europe’s economies more digital and climate-friendly. 

Large-scale common debt to be raised

For the first time ever, debts will be raised on a large scale on behalf of the EU and redistributed to member states that have been hardest hit by the pandemic. 390 billion euros will be given in the form of grants - a lower figure than the 500 billion euros originally proposed by France and Germany - and a further 360 billion euros in loans.

These payouts proved a particular sticking point in negotiations, with the so-called “Frugal Four” - the Netherlands, Austria, Denmark and Sweden - mounting especially fierce opposition. Claiming that the rescue package was unnecessary, the “frugals” voiced concerns about sending money to southern countries that they deem to be too lax with public spending. 

A compromise was therefore reached, whereby the payouts will come with important strings attached, while the frugals will be offered rebates on their EU contributions. Countries that receive stimulus payments will have their spending closely controlled and directed especially towards economic and environmental reforms. 

“Belief in our common future”

EU Council President and summit leader Charles Michel, who tweeted “Deal!” just after 5.30 am on Tuesday morning, said that the agreement “shows our belief in our common future.”

“This agreement sends a concrete signal that Europe is a force for action,” Michel said at a press conference on Tuesday morning. “It is about a lot more than money. It is about workers and families, their jobs, their health and their well-being. I believe this agreement will be seen as a pivotal moment in Europe’s journey, but it will also launch us into the future.” 

German Chancellor Angela Merkel expressed relief that an agreement had finally been reached: “It was not easy,” she said, but “in the end we gathered ourselves.” Despite difficult negotiations, the fact that the EU can “act together” fills her with hope and courage, she said. 

Merkel also managed to negotiate a special payment of 500 million euros for regions in eastern Germany. The funds are to come from the EU Structural Funds for so-called “transition regions” and are intended to reduce the differences in development between regions.