Angela Merkel

Franco-German plan for €500bn aid fund

President Macron and Chancellor Merkel, 18 May 20
President Macron and Chancellor Merkel gave a joint press conference by video link

The leaders of France and Germany have proposed a European recovery fund worth €500bn (£447bn; $545bn) to help EU countries hit hardest by the coronavirus crisis.

It would be in addition to a huge loan package worth €540bn set to be released through existing EU mechanisms from 1 June.

The new fund still requires approval by all 27 member states to be launched.

It was announced at a joint video conference by French President Emmanuel Macron and German Chancellor Angela Merkel.

Mr Macron said this aid would be made up of grants, not loans. And Mrs Merkel said the cost could be spread across future EU budgets.

It is seen as the EU's worst crisis to date - eclipsing the 2008 financial crisis.

Correspondents see the proposed fund as a move by Germany, under pressure from France, Italy and some other states, towards mutualising debt. That has long been a source of friction in the EU.

Both leaders regretted that Europe's lockdowns - including drastic border closures - had not been co-ordinated.