German Chancellor Angela Merkel hosted French President Emmanuel Macron for talks on Monday, two days before Germany takes on the rotating presidency of the European Union with an economy mired in the worst crisis since World War II.

Merkel said she hoped that European Union leaders would agree on the bloc’s next budget and a coronavirus recovery fund at a summit scheduled for July 17-18.

“Myriad talks” remain to be held, Merkel told a joint news conference with Macron. “We hope we can find a solution, even if there is still a long way to go.”

The French and German leaders have urged the European Union to reach an agreement on a recovery plan by the end of July to kickstart an economy battered by the coronavirus pandemic.

Macron and Merkel sketched out the backbone of the €750 million ($840m) fund proposed by the European Commission to bolster the bloc’s economy.

The fund would offer grants – with no repayment obligation – to countries hardest hit by the pandemic, a major policy U-turn for Berlin and a bitter pill to swallow for the bloc’s most fiscally conservative members.

‘Our absolute priority’

With more than 100,000 deaths from Covid-19, the EU is keen to demonstrate solidarity after months of bickering that has dented public confidence and put the bloc’s global standing at risk.

Macron reiterated his position that a deal on the EU budget and recovery fund could be found at the July summit. He said the fund should include €500 billion of grants to the hardest-hit countries.

“The chancellor and I put it on paper: It’s our absolute priority,” Macron said. “Without this, Europe wouldn’t rise to the challenge.”

Merkel, who had initially rejected a proposal by Macron for a recovery fund, dropped Germany’s long-held opposition to mutualising debt to fund other member states when it became clear that the pandemic was an existential threat to the EU.

“It will not fail because of us,” she said of summit talks on the recovery fund

(FRANCE 24 with REUTERS)