EU fails to agree on coronavirus bailout measures after 16-hour meeting

The Eurogroup of finance ministers has broken up an overnight virtual session after failing to agree to critical bailout measures meant to help members states grappling with the coronavirus pandemic.

Mario Centeno, the head of the group, wrote in a tweet on Wednesday morning that ministers had come close to a conclusion, reaffirming his commitment to finalising a deal.

"After 16 hours of discussions we came close to a deal but we are not there yet," Mr Centeno said. "I suspended the Eurogroup and [will] continue tomorrow, Thursday. My goal remains: a strong EU safety net against the fallout of Covid-19 … and commitment to a sizeable recovery plan."

The eurozone's finance ministers met on Monday to discuss a comprehensive stimulus package for the member states battling the Covid-19 pandemic. Europe's economies have been paralysed by the public health emergency with most countries now under lockdown to slow the spread of the disease.

Agreement on a comprehensive stimulus package to mitigate the economic fallout from the pandemic has exposed old divisions within the Eurogroup between north and south.

Nations like France, Spain and Italy had called for the creation of coronabonds to cushion the financial blow.

But more fiscally conservative nations like Germany and the Netherlands feared the initiative would ultimately lead to a pooling of sovereign debt in the eurozone with their taxpayers ultimately footing the bill.

There now appears to be consensus between France and Germany, the eurozone's most influential members, over the need to shelve coronabonds for now. But how exactly to use the European Stability Mechanism, the preferred method to provide emergency funds, remains unclear.

“Because of the current crisis we have to make an exception and the ESM can be used unconditionally to cover medical costs," Dutch Finance Minister Wopke Hoekstra tweeted on Wednesday morning. "For the long-term economic support we think it’s sensible to combine the use of the ESM with certain economic conditions."

Italy, the country worst hit by the coronavirus crisis, has been resistant to calls for conditions being attached to bailout funds. Southern nations have insisted more dramatic assistance is need as their populations turn on the EU in the face of the crisis.

"Millions of Europeans believe in the European Union. We must not abandon them. We must give them reasons to keep believing. And we must act now or never, because, right at this moment, Europe itself is at stake," Spanish Prime Minister Pedro Sanchez said before the meeting.