EU holds virtual economic recovery plan summit

"We have a collective responsibility to deliver. Today EU leaders will discuss our long term EU budget and the recovery plan to fight COVID19. Now is the time to engage," President of the European Council Charles Michel tweeted ahead of the summit.

President of the European Commission Ursula von der Leyen said the meeting was "a crucial step on the road out of the crisis", reports Efe news.

"I am very happy to present to European leaders our recovery package called Next Generation EU," she said in a video statement.

"This proposal is ambitious and it is balanced.

"Together with a new MFF this is a huge stimulus of 1,850 billion euros and it does not only help the economies of the countries which were hit the hardest by the virus it also helps the country whose economies have been hit indirectly because of the lockdowns."

Von der Leyen said the recovery plan would enable the EU to overcome the crisis in a resilient, sustainable and digital manner.

"For common success, we must stay focused on the big picture. We must all pull together, we cannot afford any delay."

The Commission will discuss a 750 billion euro rescue fund which will cushion hard struck European economies via a mixture of loans, grants and mutualized debt.

The objective will be to raise funds in financial markets which will be repaid between 2028 and 2058.

However, all EU member states need to back the proposal crafted by French President Emmanuel Macron and German Chancellor Angela Merkel to go ahead.

The commission is aiming to reach an agreement and close the pact in July so the Eurochamber can give its approval and the national ratification processes can conclude this year.

Member states agree that a post-pandemic recovery plan is needed but there are disagreements over several details such as the amount of money spent and implementing stricter terms and conditions on the allocation of funds, a move backed by the so-called Frugal Four: Austria, Denmark, Sweden and The Netherlands.

The four-member states spearheaded by Dutch Prime Minister Mark Rutte are opposed to the concept of mutualized debt which would be covered by the EU collectively and instead back countries being issued loans to be paid back.

Rutte has said the countries more in favour of austerity would prefer a time-limited fund, which would finalize in late 2022, for the economies that were most affected by the coronavirus pandemic.

France, Spain, Italy, Portugal are supportive of the Brussels plan, which includes their demands to issue common debt and prioritize subsidies to prevent their public debt from soaring when taking out loans.