Merkel, Monti and Co. Agree to European Growth Pact

Agreeing austerity alone will not be enough to pull the euro zone out of its deep crisis, the leaders of Germany, France, Spain and Italy agreed on Friday to the blueprint for a growth pact for Europe. With a value of 130 billion euros, the leaders hope to impress markets with the pact at next week’s EU summit. The countries with four-largest euro-zone economies agreed on Friday to an economic growth program with a total value of €130 billion. The sum represents 1% of the European Union’s gross domestic product, Italian Prime Minister Mario Monti said in Rome after a meeting with German Chancellor Merkel, French President François Hollande and Spanish Prime Minister Mariano Rajoy. Germany, France, Italy and Spain all agreed that growth measures undertaken so far have not been enough to pull Europe out of a debt crisis that is threatening to unravel continent’s common currency, the euro. They also agreed that budget discipline alone will not be enough to fuel economic growth and create jobs for the mass of unemployed Europeans. Chancellor Merkel said the plan was the “message we need”. She also admonished Europe to venture even closer political integration. German leader said the four countries would support the introduction of the financial transaction tax that Germany and some others are demanding in order to help recoup part of the costs of the financial crisis from the markets. In Berlin, Angela Merkel’s government cut a deal on Thursday with the opposition requiring the government to push for the tax in exchange for support from the center-left Social Democrats and the Greens for ratification of the permanent euro rescue fund, the European Stability Mechanism (ESM), and the EU fiscal pact. Merkel said that the financial markets have not yet sufficiently contributed to the costs of managing the crisis. For weeks now, possible efforts have been discussed across the EU for measures to drive economic growth. On Thursday, Angela Merkel’s center-right government agreed to a “pact for sustainable growth and employment”. Under the plan, unspent money from existing funds will be used to foster growth. There is also general agreement over calls to increase the capital of European Investment Bank, the EU’s financing institution, by €10 billion in order to give it greater lending capacity. The plans also envision so-called project bonds being financed through EU’s budget. These bonds would be issued for private-sector infrastructure projects, but would be at least partially backed by money from the EU budget. The German government is expected to push to increase the amount available in an already-agreed-to pilot phase to €1 billion. Monti had invited the three leaders to Rome ahead of next week’s EU summit in Brussels. Italian leader said countries made a positive contribution on Friday in preparing for an effective summit in EU capital next week, where proposals will be considered by all member states (…..)

Link: http://www.spiegel.de/international/europe/germany-france-italy-and-spain-agree-to-growth-pact-a-840495.html

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