Recovery deal averted 'a disastrous situation', EU executive's chief says

European Commission President Ursula Von Der Leyen speaks at news conference following a four-day European summit at the European Council in Brussels, Belgium, July 21, 2020. Stephanie Lecocq/Pool via REUTERS

BRUSSELS (Reuters) - European Union leaders pulled the continent back from disaster by pressing on through nearly five days of summit negotiations to agree on a massive economic recovery plan, the head of the bloc’s executive said on Tuesday.

Ursula von der Leyen told Reuters the hard-won deal on a 750 billion euro recovery fund and a 1.1 trillion euro common budget for 2021-2077 meant the EU was now “well equipped” to face the economic crisis caused by the coronavirus pandemic.

“I was always aware that if this wouldn’t have gone through we would have faced a disastrous situation because - Brexit’s impact ahead of us, no European budget, no public investment in size and scope that is necessary to face the crisis,” she said.

The president of the European Commission said in an interview that Europe was facing “a difficult autumn” because the economic impact of lockdowns to slow the spread of COVID-19 was more severe than first expected. The Commission has forecast that the EU economy will shrink by 8.3% in 2020.

Hopes for an agreement see-sawed throughout the fractious meeting of 27 leaders, coming finally before dawn on Tuesday after more than 90 hours of haggling.

Under the deal, the Commission will borrow from the market to disburse 390 billion euros in grants to countries, mostly on the Mediterranean rim, worst-hit by the pandemic.

The Commission’s original proposal for 500 billion euros in grants faced resistance from wealthy northern nations, though von der Leyen said the outcome was far from the zero grants they had wanted at the outset.

She said the agreement was “a message of hope and confidence” in the EU, which has struggled to stay relevant and united over more than a decade of crises over debt, migration and Britain’s exit from the bloc.

Reporting by John Chalmers; Editing by Giles Elgood