Stimulus package breaks new ground in European unity

FRANKFURT, Germany (AP) — European leaders took a historic step towards sharing financial burdens among the EU's 27 countries by agreeing to borrow and spend together to pull the economy out of the deep recession caused by the virus outbreak.

Pushed by Germany's Angela Merkel and France's Emmanuel Macron, leaders agreed to borrow together by selling bonds, using the European Union's collective strong credit rating to borrow at low interest costs. The money will fill a 750 billion-euro ($855 billion) recovery fund that will boost the hoped for economic rebound next year and restore growth and jobs lost in this year's plunge.

Two decisions - shared borrowing, and simply handing out much of the money as grants - broke longstanding resistance from some of the financially stronger countries to exposing their finances and taxpayers to troubles in southern Europe where bureaucracy and red tape continue to slow growth. Germany, which had long resisted shared borrowing, played a decisive role by changing its approach in the face of the crisis as Merkel pressed for a deal.

“With the biggest-ever effort of cross-border solidarity, the EU is sending a strong signal of internal cohesion,” said Holger Schmieding, chief economist at Berenberg bank. “Near-term, the confidence effect can matter even more than the money itself.”

The EU's executive commission predicts the bloc's economy will shrink by 8.7% this year and rebound by 6.1% next year. The goal of the spending is to support that upswing.

By turning to shared debt and spending, the EU is taking a different approach to solidarity than it did during the debt crisis that pushed Greece and four other members of the 19-country euro currency union into international bailouts in 2010-2015. Greece was rescued with loans that have to be repaid, increasing its debt load....