France and Germany will push in the coming weeks to overhaul economic governance in the eurozone in the wake of the Greek debt crisis, French President Nicolas Sarkozy said Thursday.

"/> France and Germany will push in the coming weeks to overhaul economic governance in the eurozone in the wake of the Greek debt crisis, French President Nicolas Sarkozy said Thursday.

" />
SHARE
COPY LINK

FINANCE

France, Germany push euro governance revamp

France and Germany will push in the coming weeks to overhaul economic governance in the eurozone in the wake of the Greek debt crisis, French President Nicolas Sarkozy said Thursday.

He and German Chancellor Angela Merkel “agreed that we must move forward on economic governance in the coming weeks in an ambitious and willful way,” he said after an emergency summit that agreed a new bailout of Greece.

“Our ambition is to seize the Greek crisis to make a quantum leap in eurozone governance,” Sarkozy said.

“By the end of this summer we will make common proposals concerning economic governance in the eurozone,” he said, adding that EU president Herman Van Rompuy “will make proposals in October.”

Merkel told reporters: “Recent times have shown that we must better coordinate our economic and financial policies,” adding that she and Sarkozy aimed to present joint proposals by September.

They spoke after eurozone leaders and private lenders agreed a second huge bailout of 159 billion euros ($229 billion) to contain a Greek debt crisis that threatens to spread across Europe and beyond.

Sarkozy suggested that a European credit rating agency could be set up. Eurozone leaders in their final statement Thursday said the EU should reduce reliance on external raters.

The French president has also made economic governance a key priority of his presidency of the G20 grouping of economic powers this year.

Thursday’s agreement expanded the role of the eurozone’s bailout fund, the European Financial Stability Facility, so it can buy up troubled countries’ debt.

Sarkozy said this amounted to “the initiation of a European monetary fund.”

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

FINANCE

France unveils big-spending budget to tackle Covid-shock and pledges no new taxes

France launched a free-spending budget plan on Monday, saying a fresh spike in new Covid-19 cases justified its unprecedented loosening of the purse strings.

France unveils big-spending budget to tackle Covid-shock and pledges no new taxes
French finance minister Bruno Le Maire. Photo: AFP

After €460 billion of emergency spending this year to save the economy from the virus fallout, the government built its 2021 budget plan around a €100-billion “recovery plan”, first announced this month and partly funded by EU money.

The budget came after France's health services on Saturday reported 14,412 new virus cases over the previous 24 hours – only slightly lower than the record 16,000 registered on both Thursday and Friday.

READ ALSO IN NUMBERS Covid-19 cases, hospitalisations and deaths in France

 

The fresh spike threatens to overwhelm hospitals, health officials warned, while the government imposed fresh curbs to limit the spread of the virus, including on restaurants, bars and sports facilities.

“There is no reason to give up the idea of a recovery just because the health difficulties have re-emerged,” Finance Minister Bruno Le Maire told a news conference.

The spending boost is to help the French economy to rebound strongly next year, by eight percent according to the budget, after crashing by an expected 10 percent this year, Le Maire said.

“We are implementing this recovery fund so it can be used up quickly and have the greatest possible impact on growth,” he said.

But the growth forecast immediately drew criticism from France's high council for public finance, a state body charged with making sure that government budgetary assumptions are realistic.

The growth target was “pro-active”, given the “great uncertainties” weighing on the economic outlook because of the coronavirus, the council said.

It also called on the government to be mindful of public debt which has ballooned since the start of the crisis.

France's annual deficit is estimated at 10.2 percent of GDP this year, and is to come in at 6.7 percent in 2021, the government said.

This compares with a permitted ceiling of three percent for eurozone countries, which the EU has however lifted temporarily as governments grapple with the crisis.

The government has promised that it will not raise taxes to pay for the recovery.

SHOW COMMENTS