At a time the global economy can least afford international division and deadlock, the European Union has delivered a positive message of compromise and consensus with a plan for recovery from its deepest economic crisis since the end of the second world war. In a defining moment for the elusive goal of continental unity and integration, the EU has reached what seemed an unlikely agreement on a € 750 billion (US$870 billion) recovery fund and a new, seven-year € 1.074 trillion budget. It took marathon talks between European leaders in which the key figure was the German Chancellor Angela Merkel. She may be approaching retirement in 2021 after 15 years in office but her astute manoeuvring has ensured that her influence as leader of Europe remains intact. The plan is to raise commonly issued debt through massive borrowing on capital markets and redistribute it through grants to countries based on need, with few strings attached. It represented a compromise between stimulus supporters France, Italy, Greece, Portugal and Spain and sceptics the Netherlands, Austria, Denmark and Sweden – dubbed the Frugal Four for their distaste for underwriting other countries seen as less financially prudent. The Frugals could normally have expected the support of fiscally conservative Germany. But, responding to the gravity of the crisis, Merkel changed sides and joined French President Emmanuel Macron in support of common borrowing. Deal reached on US$860 billion EU rescue fund after marathon summit The € 750 billion package originally consisted of € 500 billion in grants and € 250 billion in low-interest loans, but the Frugals succeeded in having the grants reduced to € 390 billion and loans increased to € € 360 billion. The deal also came at the cost of billions trimmed from budgets for the environment, international development and health. Merkel may have agreed to a substantial cut in proposed grants, but the Frugals ultimately agreed to a massive stimulus to which they had been fundamentally opposed. The deal, although it was never going to be perfect, keeps the EU together, which is critical to regional and even world stability.