European leaders are in the final stages of preparation for a two-day summit that could determine the future of the eurozone, with division said to be at its sharpest since Greece revealed the full extent of its deficit and debt.
Once again taking the spotlight, Angela Merkel, Germany’s chancellor, has told German politicians that the country is against distributing debt across the continent, which would be achieved through bonds.
“I fear that at the summit we will talk too much about all these ideas for joint liability and too little about improved controls and structural measures,” she said.
What Merkel wants is for certain financial responsibilities to be conceded to the relevant institutions within the European Union (EU).
The EU would then have the power to override the budgets of certain nations where it felt it was for the benefit of Europe as a whole. Then, Ms Merkel added, the discussion about “joint liability” can happen.
Brits moving to Europe will be interested to learn that, while Germany is not in favour of what are classed as short-term solutions, other European nations like Italy and France champion such moves. Here is where the division is most acute.
Mario Monti, Italy’s prime minister, has suggested, for example, the idea of using the eurozone’s rescue funds to lower borrowing costs, a move that is supported by the European Central Bank and Francois Hollande, France’s new president.
Mr Hollande, with support from the International Monetary Fund, would also like to see this cash partly redirected to Spain, to be “injected” into the country’s embattled banks.
The world markets are bracing themselves in anticipation of the outcome of the two-day summit, with scepticism rife among apprehensive investors.
“People are waiting for the inevitable, which is that policymakers will probably fail to do what is necessary,” Neil Mellor, currency analyst at Bank of New York Mellon, was quoted by Reuters as saying.
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