EU agrees €500bn coronavirus rescue package

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Italy has been struggling with huge debt since before the coronavirus crisis

EU finance ministers have agreed a €500bn (£44bn) rescue package for European countries hit hard by the coronavirus pandemic.

The chairman of the Eurogroup, Mário Centeno, announced the deal, reached after marathon discussions in Brussels.

But the ministers failed to accept a demand from France and Italy to share out the cost of the crisis by issuing so-called coronabonds.

The package is smaller than the European Central Bank had urged.

The ECB has said the bloc may need up to €1.5tn (£1.3tn) to tackle the crisis.

However, the French Finance Minister, Bruno Le Maire, hailed the agreement as the most important economic plan in EU history.

“Europe has decided and is ready to meet the gravity of the crisis,” he tweeted after the talks.

The main component of the rescue plan involves the European Stability Mechanism, the EU's bailout fund, which will make €240bn available to guarantee spending by indebted countries under pressure.

The EU ministers also agreed other measures including €200bn in guarantees from the European Investment Bank and a European Commission project for national short-time working schemes.

Ministers were close to a deal on Wednesday, but the talks broke down and had to be resumed a day later, amid a dispute between Italy and the Netherlands over how to apply the recovery fund.

The coronavirus pandemic has exposed deep divisions in Europe, where Italy and Spain have accused northern nations - led by Germany and the Netherlands - of not doing enough.