There is a "big divide" between EU member states on whether any coronavirus recovery aid should be handed out to member states as subsidies or loans, an official with the bloc said on Wednesday.

National EU leaders are meeting via video conference on Thursday to lock horns over how to kickstart growth after the coronavirus pandemic.

Following the summit, the Commission will present an updated draft of the budget on April 29, including the Recovery Fund that could raise cash against guarantees from member states.

It would have to be approved by all 27 national capitals to take effect from next year, a tall order for the bloc at a time when coronavirus is bitterly testing its unity.

The EU council should reach an initial consensus on the common financial response to the coronavirus pandemic, said Spanish Prime Minister Pedro Sanchez.

"I expect the European Council will reach a first consensus because it is indispensable," Sanchez told parliament on Wednesday. 

Spain has proposed the creation of a fund of up to 1.5 trillion euros (1.63 trillion U.S. dollars) financed by perpetual debt.

Sanchez added he wants the Eurogroup short-term coronavirus economic package that was agreed upon on April 9 to be implemented by June 1.

France backs the Spanish proposal, a French presidential adviser said on Wednesday, adding that the terms can be discussed but it should have long debt maturities. 

European Central Bank policymaker Olli Rehn on Wednesday said the European Union must agree a package to address the economic impact, especially for weaker nations, adding the bloc's future as a political community was at stake. 

"I find it essential that the European Council would come up with a convincing package in order to mitigate the economic effects of the crisis, especially for the weakest countries," Rehn, who is Finland's central bank chief, told a news conference. 

The novel coronavirus has claimed tens of thousands of lives in Europe and measures to curb its spread have left economies at a virtual standstill.

(With input from Reuters)