Brussels, 31/01/2011 (Agence Europe) - Increasing the capacity of the EFSF (a fund set up in 2010 to back stability in the eurozone) in order to enable it lend up to €440 billion in total will not be granted without gaining something in return. Germany, the eurozone's biggest economy, which in practice holds the power of veto, is laying down conditions for any increase in aid. It is reported to be demanding that the struggling eurozone countries, like Spain and Portugal, introduce additional austerity measures and agree to macroeconomic surveillance at EU level.
The conditions put forward by Germany are reported to include the introduction of legal measures in countries receiving EFSF aid that put upper limits on national debt, according to leaks from the World Economic Forum at Davos. The German constitution restricts Germany's deficit to 0.35% from now until 2016. This idea is particularly attractive to the MEPs who are rapporteurs for draft legislation to boost economic governance in Europe (see EUROPE 10298). Other conditions are stronger corporate tax harmonisation and a harmonised retirement age.
Over lunch in Brussels on Friday, Europe's leader will be discussing the package of measures to be formalised at the spring European Council (in March). Leaks to the media suggest that a summit of eurozone countries may take place at the same time. (M.B./transl.fl)