Hundreds of billions of euros distributed by Brussels to rebuild the EU’s economy after coronavirus will help create a United States of Europe, the prime minister of Spain has said. 

Pedro Sánchez said the €750-billion stimulus package would deepen European integration and build a federal union at a speech in Barcelona. 

“It has accelerated European integration towards a future United States of Europe”, Mr Sánchez, a socialist, said as he announced the pardon of nine Catalan separatist politicians serving sentences for sedition.

The mammoth rescue fund broke a long-standing taboo against the raising of common debt among the EU’s 27 member states. 

Financially austere EU countries had long resisted any suggestion that their taxpayers could be liable for the perceived excesses of the southern member states such as Spain.

A deal struck by Germany’s Angela Merkel and France’s Emmanuel Macron broke the deadlock over debt mutualisation in  negotiations over the stimulus package in July last year. 

Some €500bn of the money raised against the EU Budget will be provided in grants to the hardest-hit countries, with a further €250bn provided as loans.

The compromise wrought by the bloc’s two most influential leaders was hailed as the bloc’s “Hamilton Moment”. It is a reference to the American Secretary of the Treasury who took on debt at a federal level for the first time in US history, which was  a pivotal moment in the building of the modern United States. 

The European Commission approved Spain’s plans for spending €70 billion in grants from the Recovery and Resilience Facility over the 2021-26 period. 

The cash is a godsend for a country whose economy contracted by an almost unprecedented 11 per cent in 2020.

Ursula von der Leyen has been on a whistlestop tour of member states to announce Brussels’ approval for their spending plans and ensure the commission gets credit for the funds, which will be kept off the balance sheets of stretched national budgets. 

Talk of a United States of Europe has become unfashionable in Brussels, where officials are conscious of the sensitivities of some member states to suggestions of EU overreach on national sovereignty. 

Officials insist that debt mutualisation is a temporary emergency measures and not a precedent for the future. 

Mrs von der Leyen once declared that her “aim” was the United States of Europe. 

After she was appointed European Commisison president in 2019, she said her vision for the EU had become “more mature and more realistic.”

“In the European Union, there is unity in diversity,” she said. “That’s different from federalism. I think that’s the right way.”  

Mr Sánchez may have been motivated by a desire to tame Catalan separatism with the promise of a European superstate that would supersede national identities. 

The United States of Europe, he told his audience in Barcelona on Monday, has a “threefold integrational vision along social, territorial and intergenerational lines”.

Mr Sánchez has previously expressed the idea that “Europeanism means erasing borders while separatism means putting up borders”.  

His government majority depends on support in Spain’s parliament from separatist Basque and Catalan parties. 

Spain’s Cabinet on Tuesday approved pardons for the nine Catalan leaders jailed for their roles in holding an unlawful referendum and declaring independence from Spain in 2017, commuting what remains of their prison sentences.

Mr Sánchez said the move was the best for Catalonia and Spain, and said he hoped to “open a path of dialogue and end confrontation”.

“Spanish society wants a Catalonia that is European, prosperous, pluralistic, and sharing, and with a high degree of self-government,” Mr Sánchez said, “Spanish democracy shows its greatness today. Now is the time for politics.”

Main opposition parties and a majority of Spaniards polled on the matter are against the pardons.