The EU is sinking into the worst recession in its history but - unlike the US or China - has no plan yet to relaunch the economy, bogged down by member-state bickering.

To fix that, European Commission chief Ursula von der Leyen is to unveil an unprecedented recovery plan Wednesday that officials said will pump out around one trillion euros.

Here are key points:

Rome's fury

Ten weeks after the coronavirus put the European economy into a deep freeze, the 27-member European Union has yet to come up with a major recovery plan to put the continent back on track.

Instead, member states have poured all their efforts into their own economies, spending billions to prop up domestic champions and deal with their own unemployed.

But the responses on the home front has exposed deep inequalities across Europe, where a powerhouse like Germany can spend massively while Italy or Spain can't do half as much, hamstrung by heavy debts. 

The earliest hit by the coronavirus, Rome and Madrid complained bitterly to their partners and demanded a major act of EU solidarity to level the field.

Initially, the pleas were swatted away by their richer partners, such as the Netherlands, which leads a group known as the "frugal four" with Austria, Sweden and Denmark.

They bluntly refused a call championed by France that the EU27 jointly borrow to finance a post-crisis turnaround.

The north has a long-held mistrust - also shared by Germany - of an over indebted south that purportedly lacks enough fiscal discipline to merit closer ties.

The north's intransigence led to angry outbursts by southerners that the very future of the EU was in peril.

Merkel's bombshell

Caught short by the controversy, German Chancellor Angela Merkel last week dropped a bombshell when she teamed up with France to propose a joint EU loan of €500 billion to pay for a recovery intended for all Europeans. 

Moreover, Germany said the money would be handed out through grants and not loans, breaking the Berlin mantra that EU rescues should come at no risk or long term cost to the taxpayer.

That landmark proposal was quickly followed by an opposing riposte from the "frugal four".

They said any spending should be in loans, much like it was during the eurozone debt crisis, when desperate countries received low-interest lending, but only after signing on to painful reforms, humiliatingly overseen by foreign officials.

On Wednesday, von der Leyen will try to build a bridge between these opposing positions.

Spending on what?

The commission has made it known that is aiming to stimulate the European economy with about one trillion euros in spending.

A major chunk of that stimulus would come with the commission borrowing roughly €500 billion on the markets - as proposed by France and Germany.

Yet some of the final sum would come in the form of loans, to satisfy the frugals, and also with reform conditions attached, even if indirectly.

The recovery plan will be tied to the EU budget and the commission insists the spending will meet EU priorities with the so-called European Green Deal first among them.

It will also funds research, technology and boost industry to fight the global dominance of China and the US on the world economy.

The frugals will fight to keep money away from farming subsidies and development aid for eastern Europe that make up the biggest share of current EU spending.

Von der Leyen's proposal faces several hurdles, with EU leaders and European Parliament needing to approve it, which will probably not happen until the autumn.

The new lending capacity would itself require the green light of the EU's national parliaments which some analysts said could take well into 2021.