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Coronavirus: Merkel and Conte urge EU to back 'massive' recovery fund ahead of key meeting

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2-min read
German Chancellor Angela Merkel and Italian Prime Minister Giuseppe Conte leave after their joint press conference following talks on July 13, 2020 at the German governmental guest house in Meseberg, outside Berlin. (Photo by Tobias SCHWARZ / various sources / AFP) (Photo by TOBIAS SCHWARZ/AFP via Getty Images)
German chancellor Angela Merkel (R) and Italian prime minister Giuseppe Conte. Photo: Tobias Schwarz/AFP via Getty Images

German chancellor Angela Merkel and Italian prime minister Giuseppe Conte on Monday called for member states to back Brussels’ €750bn (£678bn, $849bn) coronavirus recovery fund ahead of the big EU budget summit on Friday.

Speaking at Meseburg Castle outside Berlin, the two leaders said they both broadly backed the aid package and urged EU leaders not to drag their feet over getting it approved.

“The slower we react, the slower Europe's recovery will be,” Conte said. He warned leaders that failure to agree on a large recovery package could risk destroying the single market.

Merkel said that the rescue package for countries that have been especially hard-hit by the coronavirus must be “massive” and should not be shrunk down.

“The task is a huge one, so the response also has to be a big one,” Merkel said.

European Commission president Ursula von der Leyen proposed a debt-financed €750bn EU recovery fund at the end of May, with €500bn of that to be issued as non-repayable grants to countries.

Merkel and French president Emmanuel Macron have led the push for the bloc to borrow as one to finance the recovery, a first for Germany which has long been opposed to any form of debt mutualisation.

READ MORE: Brexit deal and coronavirus recovery dominate Germany's EU presidency

Conte said Italy, which, together with Spain, has been worst-affected by the pandemic, would be open to stricter criteria attached to the grants and loans.

This could soften up the so-called “Frugal Four,” countries including Austria and the Netherlands, who are opposed to EU member states taking on joint-debt to finance the recovery.

Merkel said on Monday evening that she was not sure an agreement could be reached at the EU finance meeting on Friday and Saturday — it may take another summit this summer to finally achieve consensus, she said as “bridges still need to be built” between disagreeing member states.