Almost a third of the funds are earmarked for fighting climate change and, together with the bloc’s next 1 trillion-euro, seven-year budget, will constitute the biggest green stimulus package in history. All expenditure must be consistent with the Paris Agreement’s goal of cutting greenhouse gases.

The emergency funds will not only unleash vital financial support to the southern European economies hit hardest by the virus, but serve as validation that the bloc can offer meaningful solidarity to members in need. With more than 100,000 Europeans dead from the virus and an economy to rebuild, investors were looking for a display of unity to sustain the rally in stocks.

“I am very relieved,” Merkel said afterward. “We have come up with a response to the biggest crisis the EU has faced.”

Clashing Interests

Italy, the original European epicenter of the pandemic, will likely be the biggest beneficiary from the plan and expects to receive about 82 billion euros in grants and about 127 billion euros in loans, according to initial estimates, a senior Italian official said. Provisions to combat sliding democratic standards in eastern Europe were weakened at the last-minute to get the deal over the line.

“This agreement sends a concrete signal that Europe is a force for action,” Charles Michel, president of the EU leaders’ council, said at a press conference afterward. “I believe this agreement will be seen as a pivotal moment in Europe’s journey.”

The agreement did not come easy. Talks came close to collapse at several points over the summit as clashing national interests suggested consensus might be out of reach.

While governments all agreed that economic contractions of as much as 10% in some countries called for extraordinary measures, they bickered for hours over the final amount of grants, as well as how future disbursements could be scrutinized.

Crucially, the final compromise also included budget rebates for four fiscally hawkish northern countries, reducing their annual net contributions. Denmark, Germany, the Netherlands, Austria and Sweden will get more than 50 billion euros in rebates over seven years.

In the end, it largely came down to offering enough sweeteners to that group, which had been pushing for a smaller package. To bring them on board, Merkel, Macron and leaders from Europe’s South agreed to reduce the grants envelope from 500 billion euros as proposed.

“We are 27 around the table and we managed together to produce a budget,” Macron said at a press conference alongside Merkel. “In which other political sphere in the world is that possible, is that done? None.”