In a joint video conference, Macron and Merkel called for the creation of a 500-billion-euro ($543 billion) recovery fund able to offer grants to the countries and regions hardest hit by the coronavirus crisis.
The leaders of France and Germany also said they were proposing to authorise the European Commission to borrow money on financial markets in the European Union's name, while at the same time respecting EU treaties.
Macron and Merkel propose €500 billion EU recovery fund: Watch their press conference
Macron said this was the first time France and Germany agreed to let the EU raise debt jointly, calling this a "major step foward". He insisted that money from the recovery fund would be made available in the form of grants and not loans.
Merkel said that in all, EU member states and the bloc's executive would mobilise a combined sum of three trillion euros to cushion the economic impact of the coronavirus pandemic.
She said France and Germany were also in favour of reforming the EU's merger and competition rules so that the bloc can create stronger European champions after the coronavirus crisis.
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