Angela Merkel (right), and Emmanuel Macron prepare to address a media conference in Brussels, on Tuesday. AP

European Union leaders reached an "historic" deal on a massive stimulus plan for their coronavirus-hit economies at a pre-dawn meeting on Tuesday after a fractious summit that lasted almost five days.

Summit chairman Charles Michel tweeted "Deal" shortly after the 27 leaders finally reached agreement at a 5.15am (0315 GMT) plenary session.

READ MORE

Britain signs deals with two pharmaceutical companies for COVID-19 vaccines

France says up to 500 virus clusters but no second wave yet

"This agreement sends a concrete signal that Europe is a force for action," Michel said at a dawn news conference

"It is about a lot more than money. It is about workers and families, their jobs, their health and their well-being. I believe this agreement will be seen as a pivotal moment in Europe's journey, but it will also launch us into the future."

European leaders interact while wearing face masks during the last roundtable discussion in Brussels on Tuesday. Reuters

French President Emmanuel Macron said the deal was "truly historic" and that he was convinced the recovery plan and budget could meet the challenge of the coronavirus pandemic.

"This was a summit whose conclusions are truly histroric. We have put in place the capability to borrow collectively, to put in place a collective recovery plan, for the first time," Macron said. "With this recovery plan, we will reach a near doubling of the European budget over the next three years."

Officials said the deal, which came after Michel presented compromises on a 750 billion euro recovery fund, is critical to dispel doubts about the bloc's very future.

Michel proposed that within the 750 billion euro fund, 390 billion should be non-repayable grants, down from 500 billion originally proposed, and the rest in repayable loans.

News of the deal saw the Euro rise to a fresh four-month high of $1.1470.

Ursula Von Der Leyen (left) and Charles Michel do an elbow bump at the end of a news conference in Brussels. Reuters

The EU was slow to coordinate its initial response to the COVID-19 pandemic and, already weakened by Britain's departure from the bloc, a united front on economic aid would demonstrate that it can step up to a crisis and stay united.

But the tortuous summit looked like failing at times with Europe split between north and south.

"It's breathtaking to see that we have done it. We have reached a huge milestone setting up the future of the European Union," said European Commission Presidentr Ursula von der Leyen, after almost 100 hours of negotiations.

The summit approached the record length set at a 2000 meeting in the French city of Nice of almost five full days.

EU stakes high

European nations have done a better job of containing the coronavirus than the United States after a devastating early few months that hit Italy and Spain particularly hard, collaborating on medical, travel and economic fronts.

European leaders interact while wearing face masks during the last roundtable discussion in Brussels, Belgium. Reuters

The stakes at the summit were high with EU economies in freefall as Europe faces its deepest recession since World War Two, initial relief measures like short-time work schemes running out this summer, and fears that autumn could see deep economic malaise and social discontent.

Diplomats said failure would have risked further damaging a bloc struggling with Brexit and bruised by crises from the financial meltdown to migration feuds, exposing it to more eurosceptic, nationalist and protectionist forces.

Reuters