EU leaders to discuss coronavirus recovery plan

EU countries have on Thursday begun discussing a long-term economic recovery plan from the novel coronavirus pandemic in a videoconference on the bloc's 2021-2027 budget.

In a fourth meeting in seven weeks, EU heads of states and government virtually came together to discuss coronavirus restrictions.

The prime ministers and the presidents are to set the main guidelines for a recovery plan to help the European economy emerge from severe damage caused by the outbreak.

Two weeks ago, eurozone finance ministers managed to strike a deal on a €540-billion ($590 billion) financial plan to immediately support workers, businesses and healthcare systems after several rounds of strained negotiations.

However, they had been unable to agree on a previous proposal for the bloc's seven-year budget in February, with the pandemic only deepening existing divisions.

It is thus highly uncertain whether they will overcome a dispute between the southern countries Italy, Spain and France and northwestern countries Germany, the Netherlands, Austria and Finland.

Mediterranean countries have been insisting over the past month on launching an EU-wide reconstruction program financed by all members.

Other countries have refused the proposal in fear of ending up being permanently responsible for financing the highly indebted southern countries.

German chancellor Angela Merkel confirmed this position on Thursday in a speech to the federal parliament.

At the same time, she warned that her country needed to prepare to contribute more to the common EU budget in order to prevent the devastating effects of economic fallout.

Reports have emerged that a recovery fund will be linked to the next seven-year budget in a European Commission proposal.

A possible scenario is to use the so-called solidarity clause of the EU Treaty to allow the European Commission to take a loan from financial markets to be redistributed between member states.

It is yet unclear whether the recovery support would take the form of a grant or loan to be repaid later.

EU leaders are not expected to publish their conclusions after the meeting. The European Council's president, Charles Michel, is reportedly preparing to release his own statement.

The novel virus has spread to 185 countries and regions since emerging in China last December.

More than 2.64 million cases have been reported worldwide, with the death toll over 184,000, according to data compiled by the U.S.-based Johns Hopkins University. Recoveries have surpassed 721,000.