EU leaders reconvene after stormy talks over €750bn recovery package

EU leaders reconvened a summit in Brussels after a stormy first day of talks on the terms of a €750bn (£682bn) economic recovery package ended with the Dutch prime minister, Mark Rutte, complaining of an increasingly “surly” response to his demand for a national veto on spending.

Prime ministers and presidents declined to comment as they arrived back at the Europa building after the previous day’s 13 hours of talks – the first in person meeting for five months – ended in acrimony.

But in comments made to reporters overnight Rutte admitted to increasingly difficult conversations in the room. “It was a bit more surly tonight than this afternoon, yes,” he said. Boyko Borissov, the Bulgarian leader, accused Rutte of wanting to be “the police of Europe” through his demand for a national veto on recovery funds.

As leaders returned to the negotiating table on Saturday morning, Charles Michel, the president of the European council, tabled a new set of terms for the recovery fund and the seven-year budget due to start next year.

Angela Merkel set for central role in talks on EU recovery plan

Under the new plan for the recovery fund, a member state would be allowed to hold up the disbursement of cash by making a “request within three days … to bring the matter without delay, to the European council or [finance ministers] to satisfactorily address the matter”.

The Netherlands, among others, want tough conditions on the distribution of funds, especially in the context of the Polish and Hungarian governments, which have faced accusations of failing to respect the rule of law.

Rutte has insisted that he cannot be expected to take on extra national debt in order for the EU to make cash payments to member states without his parliament having a say.

Under Michel’s proposal, the level of grants would also be reduced to €450bn from the €500bn initially proposed with €300bn available in loans.

But a Dutch diplomat welcomed Michel’s latest gambit. “In the end this is a package and there are many more issues to solve. But the proposals on governance as put forward by Michel are a serious step in the right direction. Many issues remain and whether we get there will depend on the next 24 hours.”

On the long-term budget, Michel is also offering an increase of €50m to the annual Austrian rebate and an extra €25m per year for both Denmark and Sweden.

The Netherlands, Sweden, Denmark and Austria – known as “the frugals” – have been demanding less spending in the budget than previously proposed by Michel and the retention of the rebates given to the biggest payers into the bloc’s budget, known as the multiannual financial framework.

Poland’s prime minister, Mateusz Morawiecki, gave his reading of the situation in an early morning tweet: “There is a group of countries that we call a group of misers, and they call themselves frugal, who want a smaller contribution to the budget, which we call the budget for rebuilding Europe.”

The proposed change in the proportion of grants and loans in the recovery fund is also facing opposition from Italy’s prime minister, Giuseppe Conte. If the EU leaders fail to find a compromise this weekend a second summer summit in the last week of July could be on the cards.

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