Time is pressing on EU leaders to agree budget, recovery fund: Merkel

BERLIN (Reuters) - Time is pressing on EU member states to reach a deal on proposals for a long-term budget and a stimulus plan, Chancellor Angela Merkel said on Tuesday, adding that Germany would push for a compromise at a summit of leaders this week.

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“It would be desirable to reach a quick result but I don’t know whether there will be success on Friday and Saturday,” Merkel said during a news conference with Spanish Prime Minister Pedro Sanchez. “Time is pressing.”

Merkel reiterated that there is no guarantee EU leaders will bridge their differences on the proposals by European Council President Charles Michel, designed to lift the bloc out of its worst economic crisis since World War Two at the summit on July 17-18.

Michel faces the daunting task of narrowing differences between the wealthy, thrifty north and the high-debt south, hit harder by COVID-19, over how to respond to the coronavirus crisis.

He has presented a long-term EU budget of 1.074 trillion euros and a recovery fund of 750 billion euros for pandemic-hammered economies, with two-thirds of that to be in the form of free grants and a third issued as repayable loans.

The Netherlands insists on conditioning access to the funds on economic reforms, something southern countries like Italy and Spain are eager to avoid.

Sanchez said Spain would do its best to secure a deal this week. Merkel has suggested that a second summit will be needed if leaders fail to seal a deal on Friday and Saturday.

“The deal must be in July,” said Sanchez. “Spain will do all it can to make it happen.”

Italian Prime Minister Giuseppe Conte warned during a news conference with Merkel on Monday that EU economic stimulus for member states should not carry too much conditionality.

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

Reporting by Andreas Rinke in Berlin, Nathan Allen and Ingrid Melander in Madrid; Writing by Joseph Nasr; Editing by Chris Reese and Alexandra Hudson