Italy PM Conte says he will not accept 'weak compromise' on EU recovery fund

LISBON (Reuters) - Italian Prime Minister Giuseppe Conte said on Tuesday the European Union must act decisively to build a common response to the economic crisis caused by the COVID-19 pandemic, urging that support measures be activated rapidly.

Italian Prime Minister Giuseppe Conte looks on during a joint news conference with his Portuguese counterpart Antonio Costa (not pictured) at Sao Bento Palace, amid the outbreak of the coronavirus disease (COVID-19), in Lisbon, Portugal, July 7, 2020. REUTERS/Rafael Marchante

“We won’t accept a weak compromise” on an EU Commission proposal to build up a recovery fund to finance the bloc’s coronavirus-battered economies, Conte told reporters in Lisbon speaking alongside Portuguese Prime Minister Antonio Costa.

“The response has to be a strong, ambitious political response,” he said.

EU leaders still have to agree on the makeup of any recovery package, and a meeting on the recovery fund and the next joint EU budget will take place in Brussels on July 17 and 18.

Significant differences among member states remain on key issues, including whether the recovery fund will be based on loans or outright grants to those in need.

The so-called frugal countries - the Netherlands, Austria, Denmark and Sweden - insist the fund should be used to issue loans, since grants would have to be repaid by all EU taxpayers.

In a recent interview with Italian daily newspaper Corriere della Sera, Dutch Prime Minister Mark Rutte said a deal could eventually be reached on the fund structure. But he continued to argue against grants.

The grants scheme is strongly supported by the southern EU members, including Italy, whose public accounts have come under huge pressure because of the economic crunch caused by the pandemic.

Conte hopes the next European leaders meeting - the first such in-person talks in months due to travel restrictions - will push the negotiation towards the result Rome hopes to achieve.

He will travel to Madrid on Wednesday to confer with his Spanish counterpart, Pedro Sanchez, as the southern countries continue to seek a common position to bring to the European table.

Reporting by Angelo Amante and James Mackenzie; Editing by Peter Cooney