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EU leaders hail ‘historic’ deal after €1.85trn post-virus stimulus package agreed following marathon five-day talks

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European Union leaders have hailed a “historic” deal on a €1.85 trillion budget and post-coronavirus stimulus package that was finally struck today after marathon talks.

The agreement, reached in Brussels after nearly five days of fractious negotiations, exposed deep divisions between southern nations hit hardest by the pandemic and “frugal” states concerned by the cost.

It will see €750 billion distributed in grants and loans to help repair the Continent’s deepest recession since the Second World War, with Italy and Spain set receive the most. The bloc also agreed a seven-year budget worth about €1.1 trillion.

European Council president Charles Michel, who chaired the summit, called the accord — reached at 5.15am today — “a pivotal moment”. “This agreement sends a concrete signal that Europe is a force for action,” he said.

Angela Merkel (POOL/AFP via Getty Images)

French President Emmanuel Macron, who spearheaded a push for the deal with German Chancellor Angela Merkel, said it was a “historic day for Europe”. “After a very long meeting, we have reached a good result, I am very happy about it,” said Mrs Merkel. News of the agreement — which paves the way for billions of euros to be raised on capital markets on behalf of all 27 states — sent the euro to a four-month high against the dollar.

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The leaders had been warned that a failed summit amid the pandemic would have put the bloc’s viability in doubt after years of economic crisis and the UK’s recent departure.

The self-proclaimed “frugals” — led by the Netherlands and including Austria, Sweden, Denmark and Finland — insisted that aid to the Mediterranean countries should be mainly in loans, not in non-repayable grants. In a compromise, the European Commission will borrow €750 billion using its triple-A debt rating, disbursing €390 billion in grants — less than the €500 billion proposed by Germany and France — and €360 billion in cheap loans. Frictions peaked on Sunday when Mr Macron lost his temper with the “frugals”, banging his fists on the negotiating table.

European Commission President Ursula von der Leyen tweeted: “Today we’ve taken a historic step we all can be proud of. But other important steps remain … to gain the support of the European Parliament.”

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Ursula von der Leyen