Leaders of EU member states met virtually Friday to forge a compromise on how a coronavirus rescue package should be managed. 

The talks came as Europe faces the biggest recession in its history, with member states under pressure to tackle the economic impact of the COVID-19 pandemic on a continentwide basis.

As expected, the four-hour talks did not yield any major steps forward, other than unity on the desire to strike a deal as soon as possible.

European Council President Charles Michel said negotiations would continue in the near future.

What they discussed

Leaders talked about the European Commission's proposed €750 billion ($825 billion) rescue fund to cushion the economies of member states from the effects of the COVID-19 pandemic.

The plan is to provide aid through a blend of debt mutualization, grants and loans.

Under a proposal laid out by French President Emmanuel Macron and German Chancellor Angela Merkel, the Commission will raise money on the financial markets. It is to be repaid over decades, from 2028 until 2058 at the latest. The move would require the approval of all EU member states.

However, there is opposition from the so-called "Frugal Four" — the Netherlands, Sweden, Denmark and Austria — who have said they will seek to rein in the spending.

The four are also opposed to the idea of issuing common debt that would be pooled by the bloc as a whole. They would prefer the money to be handed out as part of a system of loans to individual nations, rather than grants the bloc would pay for as a whole.

European Commission President Ursula von der Leyen also wants to "revamp" the EU's next long-term budget plan for a predicted €1.1 trillion in spending from 2021-27. She said EU leaders needed to "pull together" and swiftly settle on the "ambitious and balanced" recovery plan. 

Quick decision 'essential'

While a deal was out of reach on Friday, leaders agreed to move quickly on a virus recovery deal.

Council President Michel announced an in-person summit in mid-July, saying "it is essential to take a decision as soon as possible." Von der Leyen said she hoped a deal could be secured before August.

"Leaders unanimously agreed that the severity of this crisis justifies an ambitious common response, one that combines solidarity, investment and reforms," she said. "Many leaders stressed that we must do everything in our power to reach an agreement soon in the European Council before the summer break."

Von der Leyen said differences remain on the size of the package, how the money will be distributed and the balance between grants and loans in the recovery fund.

"It's no exaggeration to say we are facing the biggest economic challenge in the history of the European Union," Merkel said after the summit

Merkel said all 27 member states had agreed to the German and French proposal for the EU to raise money on the financial markets and spend it across Europe, but stressed that the road ahead was tricky and that large compromises were needed.

Merkel said Germany was largely satisfied with the basic architecture of the program under consideration, but she expressed doubts about the basis for which money will be distributed to the EU states. She called for European competition law and approval procedures to allow for the creation of "global champions" in Europe. 

Dutch Prime Minister Mark Rutte said it would be challenging for leaders to reach a deal at the July summit.

"It is uncertain whether it would be finalized then or whether we would need more sessions, and whether they should be during the summer or later."

Read more: Opinion: Coronavirus crisis will be paid for by Europe's next generation

How likely is a deal?

DW's Brussels correspondent Georg Matthes said there were very real obstacles still to overcome.

"I'd say there are some legitimate concerns on the part of member states who are worried that mutualized debt will set a precedent for the future and many countries don't want to go down that road," he said.

However, said Matthes, there was a general consensus that Europe did need a blocwide response to the pandemic.

"There are a lot of things to discuss. When it comes down to solidarity and the recognition that a recovery fund is needed, everybody is pretty much on the same page."