The Netherlands' Finance Minister Wopke Hoekstra looks on during a video conference with EU finance ministers in The Hague, the Netherlands on Tuesday, during discussions on the economic effects of the ongoing COVID-19 situation. Photo: AFP

EU finance ministers struggled early Wednesday to bridge differences on how to rebuild their economies after the coronavirus, with Germany refusing Italy's call for unprecedented burden-sharing with hard-hit countries.

The European economy has been battered by the COVID-19 pandemic as countries impose strict lockdowns that have closed businesses and put normal life on hold.

For weeks the EU's 27 member states have bickered about ways to respond to the economic havoc, with Italy and Spain pleading for a solidarity fund that would be paid for by European partners jointly borrowing money on the markets.

Sometimes called "coronabonds," this proposal has been firmly rejected by Germany, the Netherlands and other wealthy countries who see it as an attempt by the indebted south to unfairly take advantage of the north's fiscal discipline.

But after more than seven hours of talks that started on Tuesday and pushed past midnight, Italy was refusing to back down, calling for the eurozone's wealthiest powers to move on their long-held red lines.

"Nothing is agreed at this stage. This will take time," a European source said, adding that talks would go on through the night.

Berlin and its allies are insisting that any European rescue should use the eurozone's 410 billion euro ($443 billion) bailout fund, and wait to see the effects of monetary stimulus already unleashed by the European Central Bank.

Eurogroup chief Mario Centeno is tasked with finding a compromise in a fight that has taken an emotional turn. The virus has killed more than 50,000 people so far in Europe.

"We all know this is not time for business as usual policies. We must show our citizens that Europe protects them," said Centeno, who is also Portugal's finance minister.

Ministers must "make a clear commitment for a coordinated and sizable recovery plan," he said.

On Monday, German Chancellor Angela Merkel reiterated her government's position in favor of activating the European Stability Mechanism (ESM) bailout fund to help countries that need it.

However, Merkel pointedly did not mention shared borrowing, such as coronabonds or eurobonds, which angered Rome.

"Eurobonds represent a serious response tailored to the crisis we are living through," Italian Prime Minister Giuseppe Conte argued on Monday.

Influential France backs Italy and Spain and insists the economic destruction caused by the COVID-19 outbreak demands a new perspective of thinking in Europe, and wants member countries to help each other in unprecedented ways.

AFP