Coronavirus: confidence low as EU leaders start €750bn rescue package talks

Senior politicians from member states are meeting in Brussels to discuss major deal that could include €500bn in grants

German Chancellor Angela Merkel, left, and French President Emmanuel Macron arrive for a round table meeting at an EU summit in Brussels, Friday, July 17, 2020. Leaders from 27 European Union nations meet face-to-face on Friday for the first time since February, despite the dangers of the coronavirus pandemic, to assess an overall budget and recovery package spread over seven years estimated at some 1.75 trillion to 1.85 trillion euros. (Stephanie Lecocq, Pool Photo via AP)

European Union leaders have warned major differences remain between member states over a €750 billion (Dh3.14 trillion) Covid-19 rescue package as they arrived in Brussels to begin what are expected to be difficult negotiations.

Key figures in the bloc including French President Emmanuel Macron and German Chancellor Angela Merkel are backing a deal made up of a mixture of loans and grants to help kick-start ailing economies.

But four countries mainly from Northern Europe – the Netherlands, Sweden, Denmark and Austria – are less enthusiastic about the idea unless their counterparts in the south of the continent commit to reforms that can be overseen by the bloc.

Arriving in Brussels for the talks, Mr Macron warned “it's our European project that is in play here”.

Mrs Merkel was also cautious.

"We are going into the consultations with a lot of vigour, but I must also say that the differences are still very, very large and I cannot therefore predict whether we will be able to reach an agreement this time," she said.

"It would be desirable, but we also have to face reality and we really need a great deal of willingness to compromise if we are to achieve something," Mrs Merkel said. "That is why I expect very, very difficult negotiations."

Dutch Prime Minister Mark Rutte put the chance of success over the talks, which will last into the weekend, at less than 50 per cent. He wants any loans or grants to come with strict conditions attached to ensure that heavily indebted countries such as Spain and Italy carry out labour market reform. The southern countries are strongly against this.

European Council President Charles Michel, who is hosting the talks, said it was "not only a question of money but a question of the future of the European project".

His draft plan foresees a recovery package made up of €250bn in loans and €500bn in grants and subsidies that would not have to be repaid by the recipient member countries. The bloc is suffering through the worst recession in its history