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As announced the at EU Council meeting four weeks ago, Germany and France thus intend to lay out how the economic policy of the euro-zone states can be better coordinated, thus enhancing the competitiveness of the euro zone as a whole. Angela Merkel and Nicolas Sarkozy intend to dovetail the euro-zone states’ financial and economic policy more closely, making the euro zone more competitive and strengthening the common currency.

Photo: REGIERUNGonline/Denzel Inside the Elysee-Palace

The euro will not rebound without some serious effort though. “The member states of the euro zone will have to ensure more rigorous compliance with the terms of the Stability and Growth Pact,” underscored the Chancellor, speaking after a meeting in Paris. All member states should, for instance, undertake to respond appropriately to any criticism of their budget planning voiced by the European Commission.

The community is to have a greater say in issues pertaining to the competitiveness of individual partners too. When governments work resolutely to restore economic stability, funds from the EU Structural Funds are to be used to support them in specific ways.

New phase of cooperation

The Chancellor and the French President propose in particular regular meetings of the heads of state and government of the euro-zone member states, in order the hammer out the main lines of economic policy within the euro zone. This is intended to

• Foster sustainable growth
• Strengthen competitiveness
• Prevent any imbalances.

The heads of state and government of the euro zone are to meet twice a year, and if necessary additional extraordinary meetings could be called. These meetings would be a cornerstone of the improved economic management of the euro currency area.

"We aim to win the trust of the markets by acting,” declared the Chancellor. Step by step. The debt crisis has a long history and this is not a situation that can be resolved overnight.

Angela Merkel and Nicolas Sarkozy would like to see the current President of the European Council, Herman van Rompuy, in charge of the new European economic governance.

Ceiling on new borrowing like Germany’s

Photo: REGIERUNGonline/Denzel A working visit to Paris

Like Germany, France too now intends to introduce a constitutional ceiling on new borrowing for public budgets. This is to be an example for all other euro-zone states.

They also intend to usher in a new era of economic and budgetary rapprochement between the two countries.

To this end the two finance ministers are to draw up a joint proposal regarding a financial transaction tax by the end of September. This is intended to help the European Commission in its deliberations to identify a European solution.

The ministers of economics and finance of the two countries are also to draw up a proposal for a joint business tax, which would come into force as of 2013.

Shared business, shared success

“The euro is the foundation on which our prosperity and our future are built,” declared the Chancellor, reaffirming her commitment to the joint currency.

The controversial eurobonds, bonds that would be issued jointly by all euro-zone states, are not helpful in this context, declared Angela Merkel and Nicolas Sarkozy. If such bonds were to be issued at all, it would only be appropriate at the end of a period of successful economic integration of all partners, noted the French President. Now each state must firstly ensure discipline and balance their budgets, while building a joint economic policy.