Angela Merkel

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  4. Tough negotiations expected over EU rescue plan

    Laurence Peter

    BBC News, Europe desk

    Printing worker in Madrid, June 2020
    Image caption: A printing worker in Madrid - the crisis threatens businesses EU-wide

    German Chancellor Angela Merkel is trying to rally the rest of the EU to back a huge recovery fund, faced with the severe economic impact of the coronavirus crisis.

    EU leaders are to begin tough negotiations on Friday in a video summit, but already there are concerns about countries getting even deeper into debt.

    The EU Commission is proposing a €750bn (£676bn; $843bn) fund, made up of €500bn in grants and €250bn in loans. But it requires unanimous EU approval.

    Most of the aid would go to countries hardest hit by the coronavirus crisis, notably Italy and Spain. It would be added to the planned €1.1 trillion seven-year EU budget, not yet agreed.

    Merkel and France’s President Emmanuel Macron strongly back the controversial plan for €500bn in grants. But grants, unlike loans, would mean taking on shared debt – something Germany previously opposed doing.

    The Netherlands, Denmark, Sweden and Austria, nicknamed the “frugals”, want a smaller aid total, and only in the form of loans. Others, especially Italy, argue that solidarity is needed now, to keep the single market working and stop the EU fragmenting.