London Daily

Focus on the big picture.
Monday, Feb 23, 2026

EU leaders agree on a massive, €750bn covid-19 recovery deal

EU leaders agree on a massive, €750bn covid-19 recovery deal

E.U. Adopts Groundbreaking Stimulus to Fight Coronavirus Recession. For the first time, the 27 countries will borrow and spend vast sums collectively. The $857 billion package includes unprecedented steps to help less wealthy countries, including selling collective debt and giving much of the money as grants, not loans.
The European Council, composed of the leaders of the EU’s 27 member states, agreed on a €750bn ($858bn) package to help countries’ economies recover from covid-19, part of a €1.8trn EU budget for the next seven years. The hard-fought deal shows that the bloc’s members have the sense of solidarity needed to respond collectively to disasters, despite internal political splits and grumbling from some of the rich members that foot most of its bills.

The covid-19 recovery package began as a proposal by Germany’s chancellor, Angela Merkel, and France’s president, Emmanuel Macron. It responded to the threat that the coronavirus could exacerbate the EU’s economic divisions: countries with severe epidemics, or heavy debt loads constraining government spending (such as Italy), faced much worse recessions than those with light epidemics and little debt (such as Germany).

The European Commission, the EU’s executive arm, had originally envisioned €500bn in grants and €250bn in loans. Most significant, the package was to be financed with bonds issued by the commission—the first time EU countries would issue such an enormous amount of collective debt.

The proposal for grants was bitterly opposed by a group of wealthy, mostly northern net-contributor states (nicknamed the “frugals”), led by the Netherlands and joined by Austria, Denmark, Finland and Sweden.

Mark Rutte, the Dutch prime minister, insisted that countries receiving grants carry out economic reforms, and that each individual country be empowered to veto every other country’s plan to spend the aid. As the summit stretched into a third and then a fourth day, the countries most eager for aid—Italy, Spain and Portugal—reproached the “frugals” for failing to compromise.

Another dispute centered on Hungary, where the increasingly autocratic government of Viktor Orban faces EU disciplinary proceedings over the rule of law, and where EU investigators have found extensive corruption. The commission (backed by France, the Netherlands and others) wanted measures to cut off aid if countries failed to respect the rule of law. For Hungary and Poland, which also faces rule-of-law proceedings, this was a red line.

In the end, these seemingly principled disputes were resolved through old-fashioned horse-trading. Mr Rutte and the frugals saw the amount of grants cut to €390bn, while loans were raised to €360bn. The rebates they get to lower their net contributions to the EU budget were increased, along with the amount they get to keep from customs revenue (most of which goes to the EU).

To placate their demands to hold down the overall EU budget, there were cuts to scientific research, industrial investment, rural development and other programmes. Mr Orban and Charles Michel, the European Council president, settled on language putting off mechanisms for rule-of-law sanctions to another day.

The overall result fell short of what some had hoped for. But it was greeted as a triumph in Paris and Berlin, and elsewhere by believers in a more powerful and more federal EU. The programme is equivalent to 4.7% of the EU’s GDP, a macroeconomically significant amount that comes on top of large stimulus spending by national governments. Stockmarkets were buoyed by the news. And it means the EU will engage in large-scale joint borrowing for the first time, giving the bloc significant fiscal resources to fight a recession collectively.

The resistance of Mr Rutte and the frugals was based on the fear that once Europe has agreed to use collective debt once, it will probably do so again. For advocates of a stronger EU, that is not a fear but a hope.
Newsletter

Related Articles

0:00
0:00
Close
UK Economy Faces Acute Strain as Trump’s Global Tariff Reshapes Trade Landscape
UK Signals Retaliation Is Possible as New US Tariff Policy Threatens Trade Stability
British Police Arrest Former Ambassador Peter Mandelson in Epstein-Related Misconduct Probe
Australia Officially Supports Proposal to Remove Andrew Mountbatten-Windsor from Royal Succession
Diverging Polls Show Mixed Signals on UK Economic Revival as Confidence Remains Fragile
Spotify Expands AI-Driven ‘Prompted Playlists’ Feature to the United Kingdom and Other Markets
Greens and Reform UK Surge in Manchester By-Election, Threatening Labour’s Historic Stronghold
UK Businesses Push for Closer European Trade Links Amid Renewed US Tariff Uncertainty
Deloitte Global Overhaul Sparks Leadership Contest in the United Kingdom
University of Kentucky and Microsoft to Showcase Campus-Wide AI Innovation
UK Food System Faces Acute Vulnerability to Shocks, Experts Warn
Reform UK’s Proposed ICE-Style Deportation Scheme Triggers Sharp Backlash
U.S. Global Tariff Push Leaves Britain, Australia and Others Facing Higher Costs and Trade Strain
UK Police Officers Guarded 2010 Epstein Dinner Attended by Prince Andrew, Reports Say
US Trade Representative Affirms Commitment to Existing Tariff Agreements with UK and Other Partners
Activists at the Louvre hung a framed Reuters photograph of Andrew Mountbatten-Windsor slumped in the back of a car leaving a police station on the day of his arrest
The royal biographer said that he expected the police to 'look at the money trail' - including Sarah Ferguson borrowing money from Epstein
A Protestor screams in NYC: “Bill Gates is on the Epstein’s List…”
FBI and Secret Service Hold Press Conference After Shooting Incident at Mar-a-Lago
Mark Zuckerberg Testifies in Trial Over Social Media's Impact on Children's Mental Health
Maggie Oliver exposes Keir Starmer using letters to close child rapists investigations
Kouri Richie's wrote a children’s book to help her sons grieve the death of their father. Now she’ll stand trial for his murder
New York Braces for Major Snowstorm With Up to 18 Inches Forecast and Blizzard Warnings Issued
Mexican Military Kills CJNG Leader Nemesio Oseguera Cervantes as Violence Erupts Across Jalisco
Metropolitan Police Deploys Palantir-Powered AI to Flag Potential Officer Misconduct
UK Parliament Rebukes Police Over Ban on Israeli Football Fans
Britain Emerges Among a Small Group of Nations Without a Religious Majority
UK’s Manufacturing Base at Risk as Soaring Energy Costs Weigh on Industry
Matt Goodwin’s Unconventional Campaign for Reform UK in the Gorton and Denton By-Election
US Military Movements in the UK Spark Speculation Over Preparations Related to Iran Tensions
UK Faces Significant Economic Risk From Trump’s New Global Tariff Regime
UK Defence Secretary Signals Intent to Deploy British Troops to Ukraine
UK Students Mark Lunar New Year as Universities Adjust to New Equality Compliance Rules
UK Government Weighs Removing Prince Andrew from Line of Succession After Arrest
Prince Andrew’s Arrest in UK Rekindles Scrutiny Over US Handling of Epstein Records
Trump’s Strategic Warning to UK Over Chagos Islands Deal Sparks Diplomatic Whiplash
Starmer Government Postpones Local Elections Affecting 4.5 Million Voters
UK Economy Remains Fragile Despite Recent Upturn in Headline Indicators
UK Businesses Face Fresh Uncertainty Following US Tariff Ruling
Reform UK’s Senior Figures Face Scrutiny Over Remarks on Women and Family Policy
UK Electric Vehicle Drive Threatened by Shortage of 44,000 Qualified Technicians
University of Kentucky Trustees Advance Academic Reforms and Approve Coliseum Plaza Purchase
Boris Johnson Calls for Immediate Deployment of UK Troops to Support Ukraine
OpenAI CEO Sam Altman praises the rapid progress of Chinese tech companies.
North Korea's capital experiences a significant construction boom with the development of a new city district dubbed 'Pyonghattan'.
New electric vehicle charging service eliminates waiting times
Vox Populi confronts Justin Trudeau at Davos over vaccination policies
Poland's President Karol Nawrocki ENDS support for Ukrainian citizens:
The mayor of Rotherham in Britain
One day after ex-Prince Andrew's arrest, British police are searching his former home, while U.K. lawmakers will consider introducing legislation to remove him from the line of royal succession
×