A consensus has NOT been found at EU Leaders Dinner

There are reports that NO consensus has been found at EU Leaders Dinner.

A European Union plan to breathe life into economies throttled by the COVID-19 pandemic hung in the balance on Sunday.

Leaders have quarrelled over how to carve up a vast recovery fund and what strings to attach for countries it would benefit.

After three days of meetings in Brussels, the 27 EU states were still seeking a compromise on the fund after haggling into the evening over moves designed to help haul Europe out of its deepest recession since World War Two.

Diplomats said it was not clear whether they would abandon the summit and try again next month, or plough on through the night.

Key points

Reuters reports on the following key points:

• A1.8-trillion-euro ($2.06-trillion) package for the EU's next long-term budget and recovery fund is in the balance.
• The 750 billion euros proposed for the recovery fund would be raised on capital markets by the EU's executive European Commission and funnelled mostly to hard-hit Mediterranean rim countries.
• European Central Bank President Christine Lagarde said it would be better for the EU leaders to agree an "ambitious" aid package than to have a quick deal at any cost.
• "Ideally, the leaders' agreement should be ambitious in terms of size and composition of the package ... even if it takes a bit more time," she told Reuters.
• Lagarde's comments suggested she was relaxed about the possibility of an adverse reaction on financial markets if the summit fails, especially as the ECB has a 1 trillion euro-plus war chest to buy up government debt.
• A group of "frugal" wealthy north European states have pushed for a smaller recovery fund and sought to limit how the payouts are split between grants and repayable loans.

Another attempt at reaching a compromise failed

key points: (Reuters)

• On Sunday evening, another attempt at reaching a compromise failed.
• A deal envisaging 400 billion euros in grants - down from a proposed 500 billion euros - was rejected by the thrifty north, which said it saw 350 billion euros as the maximum.
• A Dutch proposal for higher budget rebates faced opposition over concerns that these changes would hit the EU's flagship plan to come to net-zero greenhouse gas emissions by 2050.
• "The volume of grants is make or break," one diplomat said, as the leaders continued discussions over dinner.
• There were also differences over a proposed new rule-of-law mechanism that could freeze funding to countries flouting democratic principles.

Market implications

Eyes on the euro for the start of the session. it was last week's top performer...

• The Chart of the Week: EUR/USD to complete a reverse H&S prior to next leg higher?