EU leaders task European Commission to link coronavirus recovery fund to budget

BRUSSELS/PARIS - European Union (EU) leaders in a video summit on Thursday tasked the European Commission to shape the bloc's collective response to the coronavirus pandemic and link a recovery fund against the pandemic with the EU's next long-term budget starting next year.

Charles Michel, the President of the European Council, said EU leaders agreed a recovery fund is needed and urgent.

German Chancellor Angela Merkel said in a briefing that it is clear to everyone that the EU needs such a recovery fund.

No specific amount was given, however. French President Emmanuel Macron said disagreements over the size and shape of the rescue package remained.

Ursula von der Leyen, the President of the European Commission, said the EU's executive arm would start working on the details.

"Based on proposals from the European Commission, we will work constructively on a joint strategy for the recovery phase, linked to the multi-year budget," Dutch Prime Minister Mark Rutte said on Twitter.

"This fund shall be of a sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected, and be dedicated to dealing with this unprecedented crisis," Michel said.

The EU must provide budgetary transfers and not just loans to its worst-hit regions and sectors to help restart the economy, said Macron. "In the moment we are living through, these transfers must be transfers by subsidies, real budgetary transfers."

With a rescue package worth at least 5 to 10 percentage points of EU gross domestic product, an agreement within EU could allow the issuance of debts with a common guarantee in order to finance "budgetary transfers towards a region or a particularly hit sector, with very clear rules and governance and accepted by all," said the French president.

"No consensus is reached today. But it is an answer that we will have to provide and I believe that our Europe has no future if we can not provide this answer," he added. "If we let part of Europe fall, all of Europe will fall with it."

The EU leaders also endorsed a separate 540-billion-euro (587 billion U.S. dollars) package, drawn up by euro area finance ministers earlier, to set up safety networks for workers, employers and member states.

The package should be operational by June 1, according to the EU leaders.