BERLIN/BRUSSELS - The European Union (EU) is aiming to launch a recovery fund on Jan 1, 2021 in the best case scenario, an EU official said on Thursday.

Spain has proposed the creation of a fund of up to 1.5 trillion euros (US$1.62 trillion) financed by perpetual debt.

The European Commission is considering a plan that would produce two trillion euros to finance a European economic recovery after the deep recession that the pandemic is expected to cause this year, an internal note of the EU's executive showed

The European Commission is considering a plan that would produce two trillion euros to finance a European economic recovery after the deep recession that the coronavirus pandemic is expected to cause this year, an internal note of the EU's executive showed.

According to the note, both the EU's next long-term budget for 2021-2027 and a new fund, called the Recovery Instrument, would be used to kickstart growth.

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The note includes the Commission's proposals for an EU leaders' summit taking place later on Thursday. Officials warned the proposals included in the document could still change.

Under the proposal so far, the Commission could borrow 320 billion euros on the market and then lend roughly half of that amount to governments.

The rest of the borrowing would be part of the EU long-term budget and be repaid by EU governments after 2027 over a long time or be paid back through future additional income to the EU budget, like new EU taxes for instance.

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There would also be another 200 billion in the budget in a Recovery and Resilience Facility, and a further 50 billion euros in re-purposed cohesion funds -- money normally spent on equalizing the standards of living in the 27-nation bloc, that would be front-loaded to be spent in 2021-22.

According to the note, EU leaders could endorse legal texts for the plan in June to allow the Recovery Instrument to kick in immediately and the next EU long-term budget to enter into force on Jan 1, 2021.