Angela Merkel fears economic crisis is being underestimated in EU

Leaders clash over coronavirus recovery funds, with Germany pushing for swift resolution

Angela Merkel voiced fears that people do not appreciate what it will mean to slump into the “deepest recession since the second world war”, as EU leaders clashed over a recovery fund for the countries hit hardest by the coronavirus pandemic.

During a video conference call among the 27 heads of state and government, the German chancellor gave her backing to the French president, Emmanuel Macron’s call for agreement before the summer holidays on a €750bn rescue package.

Merkel said Europe faced “very, very difficult times” and mused on whether the gravity of the situation was truly understood as she addressed her counterparts phoning in from around the EU, according to diplomatic sources. The value of the economies of some member states are expected to shrink by up to 10% in 2020.

“It was clear that we wouldn’t reach a result today but we will continue discussions in mid-July,” Merkel later told reporters. “Everyone said what they thought was positive and of course brought in points of criticism too. The bridges that we still have to build are big.”

Macron had also urged his fellow leaders to find common ground next month, citing the need to calm the markets before a difficult phase of talks on the future trade and security relationship with the UK. Ireland, Belgium and the Netherlands want the recovery fund to offer them support in the event of the negotiation ending without a deal.

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