BRUSSELS—Negotiations among the European Union’s 27 leaders for recovery plans worth €1.8 trillion ($2.06 trillion) were deadlocked late Sunday, leading to tense exchanges and fears of a breakdown.

After three days of talks to agree a proposed spending package to lift Europe’s economy out of a coronavirus-sparked slump, EU leaders were still divided over the size of the final plan, how much of it should be available in grants and some of the conditions attached.

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