• France's news in English
 

Merkel and Hollande talk ahead of crunch summit

Published: 28 Jun 2012 09:41 GMT+02:00

Germany's Angela Merkel held last-minute talks with French President François Hollande on Wednesday before a crucial EU summit but warned she would not budge in her opposition to pooling eurozone debt.

In brief statements before the talks here in Paris both leaders made conciliatory gestures, with Hollande indicating he was ready to discuss further integration and Merkel hailing measures to promote eurozone growth.

But there was no sign that Paris was ready to immediately accept closer European political integration and Merkel had already dismissed a key French proposal – eurobonds pooling the bloc's debt – before even arriving in Paris.

"We both want to deepen economic, monetary – and in the future political – union, to arrive at integration and solidarity," Hollande said.

He said the eurozone needed "integration as much as necessary, solidarity as much as possible."

Merkel said the two-day EU summit starting in Brussels Thursday will be "of very great importance for the future of Europe."

"Significant progress has already been made regarding the growth pact," she said, referring to a plan to invest up to 130 billion euros ($162 billion) in kickstarting eurozone economic growth.

"We need more Europe, we need a Europe that works, the markets are expecting this, and we need a Europe whose members help each other," she added.

France and others have pushed the idea of issueing debt backed by the entire eurozone as a means of tackling the crisis, but Germany insists closer political and economic integration is needed first.

"Guarantees and controls must go hand-in-hand. There can only be joint liabilities when sufficient controls have been put in place," Merkel told the German parliament.

"Apart from the fact that instruments like eurobonds, eurobills, debt redemption schemes and much more are not compatible with the constitution in Germany, I consider them wrong and counterproductive."

Merkel's Paris meeting was the latest in a rush of shuttle diplomacy to prepare for the summit in Brussels that will seek to tackle the short-term crisis and thrash out measures to prevent it occurring again.

The centrepiece of the summit is likely to be a repackaging of existing accords into the "growth pact" – hailed as amounting to one percent of European output. 

But leaders will also seek to define the shape of the embattled eurozone for the next decade, seeking closer integration in the form of a banking union and handing powers to the European level for countries' financial sectors and budgets.

European leaders were handed a stark warning by crisis-hit Spain earlier Wednesday, whose prime minister, Mariano Rajoy, said his country cannot continue to finance itself at the high rates it currently pays on the markets.

"The most urgent subject is the subject of financing," Rajoy told parliament.

"We cannot finance ourselves for a long time at prices like those we are now paying," he said, as the yield on Spanish government 10-year bonds traded at more than 6.8 percent.

The warning raised the nightmare scenario that Spain, the eurozone's fourth biggest economy, might need a full-blown sovereign bailout with dire consequences for the rest of the bloc.

And Rajoy warned that the problem of higher borrowing costs, which already forced Portugal, Ireland and Greece to seek multi-billion-euro bailouts, was not limited to Spain.

"There are institutions and also financial entities that cannot access the markets. It is happening in Spain, it is happening in Italy and it is happening in other countries," he said.

As if to prove his point, Italy had to pay investors much higher rates of return at a short-term bond auction later Wednesday.

Spain's central bank also warned that the country's crippling recession was deepening.

After economic output shrank by 0.3 percent in the last quarter of 2011 and again in the first quarter of 2012, the latest data showed further contraction in the second quarter and "at a more intense pace", it said.

In one positive sign ahead of the summit, Italy's parliament approved a controversial labour market reform on Wednesday, in time for Prime Minister Mario Monti to arrive at the meeting with it in hand.

The reform, which Monti's government says is key to restarting growth in the recession-hit economy, should help reassure Monti's EU partners on Italy's commitment to reform.

The International Monetary Fund meanwhile said that Cyprus, which on Monday requested a bailout from the EU to protect its Greek-exposed banking sector, has asked it for financial aid.

"Today, the IMF received an invitation from the Cypriot authorities to participate in the external financial assistance to contain the risks to the Cypriot economy," IMF managing director Christine Lagarde said in a statement.

Eurozone finance ministers said after a conference call Wednesday that they were favourable to Cyprus's request for financial help in coordination with the IMF.

Your comments about this article

Today's headlines
Cannes race wide open on eve of awards
Cate Blanchett in Cannes. Photo: Valery Haché/AFP

Cannes race wide open on eve of awards

The competition for the Palme d'Or at the Cannes Film Festival wraps up Saturday with a clutch of favourites jockeying for one of global cinema's most coveted prizes. READ  

Waterloo: Why is it still taboo for the French?
A Waterloo reenactment. Photo: AFP

Waterloo: Why is it still taboo for the French?

France stood accused this week of "sulking" because it failed to nominate any high-ranking official to attend the gigantic commemoration for the 200-year anniversary of the Battle of Waterloo. READ  

France's cheapest holiday spots revealed
Holidayers in Nice, southern France. Photo: AFP

France's cheapest holiday spots revealed

It doesn't take a genius to figure out that Paris is the most expensive region in France to spend a summer holiday... but where is the cheapest? A new study has found the answer. READ  

France pulls up sunken tyres from artificial reefs
The tyres are hauled up from the seabed. Photo: AFP

France pulls up sunken tyres from artificial reefs

Tourists and film stars hitting the beach at the French Riviera resort of Cannes may be blissfully unaware but lurking beneath the sparkling waves are tens of thousands of now troublesome scrap tyres, sunk deliberately to boost marine development. READ  

French films
The best French films you've never heard of
French actor Tahar Rahim in a scene from A Prophet. Photo: YouTube/Screengrab

The best French films you've never heard of

With the Cannes Film Festival nearing its end and with everyone talking about everything film - we take a look back at the best ten French movies you've probably never heard of, thanks to French cinema expert Judith Prescott. READ  

Tourism in Paris
Eiffel Tower shuts as staff protest pickpockets
Tourists at the France's iconic Eiffel Tower. Photo: AFP

Eiffel Tower shuts as staff protest pickpockets

The Eiffel Tower was closed on Friday morning, as workers protested over the scourge of pickpockets around the famous monument, who they say have threatened and attacked them. READ  

Paris couple found in flat with throats slit
Photo: AFP

Paris couple found in flat with throats slit

A woman, who was reportedly pregnant, was found dead with her throat slit in a Paris apartment on Friday while her partner was left in a critical condition. An electric sander was found running beside their bodies. READ  

Cannes Film Festival
Sophie Marceau: Queen of baring all at Cannes
Sophie Marceau is a member of the Feature Film jury this year at Cannes. Photo: AFP

Sophie Marceau: Queen of baring all at Cannes

French actress Sophie Marceau is surely the undisputed queen of the Cannes wardrobe malfunction after her plunging jacket gave photographers more than an eyeful once again this week. And it's not the first time she's given the paparazzi palpitations. READ  

Cameron to visit Paris to push for EU reform
UK PM David Cameron will hope to convince François Hollande that Britain should be allowed to renegotiate its relationship to the EU. Photo: AFP

Cameron to visit Paris to push for EU reform

UK Prime Minister David Cameron is to visit Paris next week as part of his charm offensive as he tries to persuade European leaders to allow Britain to renegotiate its ties with the EU, ahead of a planned In/Out referendum in the UK. READ  

Homes in northern France shaken by quake
The quake was felt across the Channel in the northern French departement of Pas-de-Calais. Photo: France's Central Bureau of Seismology (BCSF)

Homes in northern France shaken by quake

The tremors from a 4.4 magnitude earthquake were felt in northern France early on Friday morning, prompting several worried calls to the emergency services. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Features
Take a tour of the best Metro stations that Paris has to offer
National
Soon there'll be a fixed fare for a taxi ride from the airport into Paris
National
Drug dealers in Marseille are offering customers loyalty cards
Soon there'll be no minimum for using your bank card in France
Features
Eurovision is around the corner - and we don't fancy France's chances
Features
Fancy starting a business and living in Paris? There's help available
National
Are you fearing a Brexit? Maybe it's time to become a French citizen
How hard-up French are tempted by money to take migrants to the UK
Bupa
Sponsored Article
Healthcare: 9 questions every expat should ask
Education
More English words (including 'le selfie') sneak into French
Charlie Hebdo to give €4.3m to attack victims
National
French Protestants bless gay marriage
Opinion
Why elitism is dragging France down
Features
RECIPE: How to make your own picnic-perfect meringues
Business & Money
French tax declaration deadline: Key things to remember
VIDEO: Can YOU pronounce the trickiest word in French?
France tops holiday wish list for children
National
Study: Women do bulk of housework in France
National
VIDEO: Police use force on Calais migrants
National
This man is France's Instagram king. But who else makes the top list?
Features
Free museum entry, film festivals, sports... see What's On this in May
Culture
Behind the curtain: A closer look at the Cannes Film Festival
National
It's a boy! Baby born on Air France flight to Paris
Features
Love-locked: Whatever happened to Paris's beautiful bridges?
'Forget the UK election, expats should be able to vote in France'
Thomas Piketty backs Miliband for Britain but not Hollande for France
Gallery
The most spectacular sunset pictures from around France
National
France tells migrants in Calais to 'forget the UK and stay here'
Who's to blame? Trial after Frenchman dies downing 56 shots
Society
VIDEO: See what's beneath the surface of the French Riviera
National
French teen suicide after sex video web bullying
France launches bid to buy Europe's biggest and most spectacular dune
Business & Money
Why May 2015 is the best month in years to work in France
Five great outdoor bars in Paris to check out this summer
Double standards? French Muslim barred from class over long skirt
National
France goes on the defensive after UN experts say 'racism is trivialised'
Five reasons we should be worried about France's new snooping laws
International
The French don't seem to care about the UK election and that's normal
Culture
Only in France? Naked comedian stuns French culture minister
Migrant camps spring up in the heart of Paris
International
France bags another fighter jet deal but should Paris thank the US?
Society
French elevator protocol: Greeting, flirting and yes, even sex
Travel
Getting from CDG airport to Paris by road should now be a lot quicker
Politics
Why all the dodgy ties? A French view of the UK general election
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se