Coronavirus: EU leaders extend talks on unprecedented virus recovery fund

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.

German Chancellor Angela Merkel warned that the discussions could still end without a deal.

“Whether there will be a solution, I still can’t say,” she said, as she arrived early for the extra day of talks at what had been planned as a two-day summit in Brussels.

“There is a lot of goodwill, but there are also a lot of positions. So I will join in working for it. But there may also be no result today.”

Mrs 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.”

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.

On Sunday morning, they continued their talks along with summit host Charles 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.

The urgency of the talks is underscored by coronavirus pitching the EU into its worst recession ever and killing around 135,000 of its citizens.

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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