Merkel crisis: German Chancellor fights to rescue EU coronavirus plan – ‘No guarantees’

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Her words came on the day she met Giuseppe Conte in Germany – with the Italian Prime Minister ominously warning Brussels against any attempt to box his country in when it came to economic measures aimed at curtailing public spending. Mrs Merkel said Germany and Italy had agreed in principle on proposals aimed at bridging gaps among EU states on a long-term budget and a stimulus plan.

I don’t know if we will reach an agreement

Angela Merkel

However, during a joint news conference with Mr Conte at Schloss Meseberg palace, just outside Berlin, Mrs Merkel said nothing could be taken for granted when it came to the meeting EU27 leaders at the summit, due to get underway on Friday.

She said: “I don’t know if we will reach an agreement.

“It is still not sure and the path remains long.”

Mr Michel will chair the first face-to-face talks of the 27 European Union heads since lockdowns were imposed across the continent in March, since when feuds have raged over how to respond to the coronavirus divided the bloc.

In a bid to overcome sizeable differences over how best to boost economic growth between the wealthy, thrifty north and the high-debt south, hit harder by COVID-19, Mr Michel has proposed a smaller joint EU budget for 2021-27 than previously envisaged.

The former Belgian Prime Minister has presented a long-term EU budget of just over one trillion euros, together with a recovery fund of 750 billion euros for pandemic-impacted economies.

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Two-thirds of that will come in the form of free grants and a third issued as payable loans – a point which has proven particularly contentious among the so-called “frugal four” of the Netherlands, Austria, Denmark and Sweden, all of whom believe the proposals will bankroll massive public spending in Spain and Italy, the two countries hardest hit by COVID-19.

Dutch Prime Minister Mark Rutte is insisting on enshrining economic reforms as conditions for accessing the funds, something the south of the bloc is keen to avoid.

Mr Conte warned told reporters EU economic stimulus for member states should not carry too much conditionality.

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Italy was happy for EU institutions to monitor its economic reforms, he insisted, but imposing excessively stringent conditions would be counter-productive.

He added: “It’s not in anybody’s interests to introduce conditionality that would compromise the support of the programme or give it scarce practical impact.”

Speaking to the Italian magazine Corriere della Sera earlier this month, Mr Rutte said: “The impact of the pandemic has been huge on Italy, both in terms of human lives and economic damage.

“We understand and therefore we must help Italy.”

However, he stressed the economic reforms were necessary to ensure Italy was able to make itself resilient to future crises.

He added: “I think it is admirable what Prime Minister Conte has done so far.

“The measures he has taken to make Italy more productive and competitive.

“Unpopular measures have also been taken, and that is a good start.

“It is crucial that Italy is next time able to respond to a crisis on its own.”

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