BRUSSELS—European Union leaders agreed on a €1.8tn ($2.06tn) spending package aimed at containing an unprecedented economic downturn by resorting to new measures that could ultimately deepen the bloc’s economic integration.

The package, built around the bloc’s first-ever issuance of hundreds of billions of euros of common debt, came together early on 21 July after four days of talks among the bloc’s 27 leaders—the bloc’s longest summit in 20 years. German Chancellor Angela Merkel and French President Emmanuel Macron were forced to compromise on what would be spent and how much would be handed out in grants.