Merkel downbeat on chances of deal as EU budget summit begins

Leaders' differences over budget and recovery package still very large', German chancellor says

EU leaders remained poles apart on the terms of a 1.82tn budget and recovery package as they met for the first time in five months, with Angela Merkel warning of the possibility of talks dragging into a second destabilising summer summit.

Spain's prime minister, Pedro Sanchez, told fellow leaders in Brussels they had an obligation" to agree on a response to an economic downturn unparalleled since the Great Depression.