EU agrees 'historic' recovery deal

European Union leaders reached a deal on Tuesday on a package of measures to boost their economies after the coronavirus pandemic, agreeing to borrow and spend hundreds of billions of euros in the next few years and pay them back from new taxes.

Francis Maguire reports.

Euro zone shares reached their highest since March on Tuesday (July 21) as markets welcomed news of an EU recovery deal.

The almost $860 billion stimulus plan is designed to help European economies hit hard by coronavirus.

After a tense five-day summit, EU leaders agreed around $446 billion will be handed out as grants, rather than lent, to countries most in need of stimulus.

While just over $411 billion will go out as cheap loans.

The grants will be given to countries which present job-creating plans that strengthen their growth potential and the resilience of their economies.

The plans must also make economies greener and more digital, and be in line with the Commission's yearly recommendations.

French President Emmanuel Macron.

"The conclusions of this summit are truly historic.

We have set up a capacity to borrow collectively, to put in place a collective recovery plan, for the first time." The grants force the bloc to generate cash to repay the borrowing by 2058.

Leaders agreed green measures to raise the cash.

It includes a tax on non-recycled plastic, with the proceeds to EU coffers.

Another feature of the deal sees net contributors to the EU budget like the Netherlands and Germany receive much deeper rebates than before on what they have to contribute each year to EU accounts, based on the size of their economies.

In early trade, an index of eurozone stocks rose 1.3% to touch its highest level since March 5.

One analyst from financial services firm Jefferies told Reuters environment-friendly companies will benefit from the budget.

He said southern states like Spain and Italy also stand to do well from the deal.

Blue-chip equity indexes in both countries rose around 2.0% following the agreement.