EU leaders have struck a deal on a huge post-coronavirus recovery package following a fourth night of talks.

It involves €750bn (£677bn; $859bn) in grants and loans to counter the impact of the pandemic in the 27-member bloc.

The talks saw a split between nations hardest hit by the virus and “frugal” members who were concerned about costs.

It is the biggest joint borrowing ever agreed by the EU. Summit chairman Charles Michel said it was a “pivotal moment” for Europe.

The deal centres on a €390bn programme of grants to member states hardest hit by the pandemic. Italy and Spain are expected to be the main recipients.

A further €360bn in low-interest loans will be available to members of the bloc.

The agreement followed a long weekend of talks, during which tempers were often frayed. Member states were largely split between those hit hardest by the outbreak and those more concerned about the costs of the recovery plan.

The “frugal four” – Sweden, Denmark, Austria and the Netherlands – along with Finland had opposed extending €500bn in grants.

The group originally set €375bn as the limit, in addition to conditions such as the right to block requests. Other members, such as Spain and Italy, did not want to go below €400bn.

At one point French President Emmanuel Macron reportedly banged his fists on the table, as he told the “frugal four” they were putting the European project in danger.

The €390bn figure was suggested as a compromise, and “frugal” nations were reportedly won over by the promise of rebates on their EU budget contributions.

Another issue was over linking aid to the “rule of law”. Hungary and Poland both threatened to veto the package if it adopted a policy of withholding funds from nations deemed to fall short of democratic principles.