France and Germany are proposing a €500bn ($545bn; £448bn) European recovery fund to be distributed to EU countries worst affected by Covid-19.
In talks on Monday, French President Emmanuel Macron and German Chancellor Angela Merkel agreed that the funds should be provided as grants.
The proposal represents a significant shift in Mrs Merkel’s position.
Mr Macron said it was a major step forward and was „what the eurozone needs to remain united”.
„I believe this is a very deep transformation and that’s what the European Union and the single market needed to remain coherent,” Mr Macron said.