Brussels, 09/01/2012 (Agence Europe) - The European response to the sovereign debt crisis will involve boosting economic growth. It is essential that the Europeans not only ensure the survival of the eurozone as a budgetary pillar that guarantees the effectiveness of public finances, but also that they make “Europe more competitive” with a second pillar that boosts growth. Angela Merkel made this announcement on Monday 9 January after her meeting with the French president, Nicolas Sarkozy. France and Germany are proposing that different legislation on the labour market be examined, in an effort to see which countries are most successful in this field, added the chancellor, who also announced, proposals in this area in view of the forthcoming European Council on Monday 30 January. Sarkozy emphasised that “today's priority involves growth, employment and competitiveness in our continent”. He promised Franco-German proposals on “getting the unemployed back to work, ensuring that European funds help competitiveness and fiscal convergence”.
Some eurozone member states such as Germany are suffering from a severe shortage of skilled labour, whereas others, such as Spain, have to deal with a situation where youth employment is above 25%. At the end of December, the European Commission launched an initiative on youth employment prospects and urged member states to use European Social Funds more effectively (see EUROPE 10520).
Budgetary treaty. The two leaders emphasised their joint analysis of the debt crisis. Merkel was delighted that the treaty for strengthening budgetary discipline was making good progress and that the text was expected to be signed at the beginning of March. She also welcomed the fact that there was a real possibility of including a “golden rule” in national constitutions, which will put a cap on public debt. On the question of consolidating public finances, Sarkozy indicated that the public deficit in France in 2011 would be less than €4 billion of the commitments already made. This year, France is aiming at establishing a deficit of 5.7% in relation to GDP and is committed to getting back to below the 3% threshold in 2013. Paris and Berlin have also agreed on the need to get the European Stability Mechanism into force by July 2012, by speeding up the capitalisation of permanent rescue funds.
The Franco-German duo also reiterated the fact that Greece still has its place in the eurozone on the condition that the country respects its commitments. The second financial assistance programme is currently being finalised and includes private sector participation, which the Greek government is striving to negotiate with its creditors. Swift progress will be required, failing which, it will be impossible to pay the next tranche of aid, warned the German chancellor.
Italy. On the initiative of the president of the European Council, Herman Van Rompuy (see other article), the Italian government is expected to give a positive welcome to the Franco-German declarations on competitiveness in Europe. On a visit to Paris last Friday, the Italian prime minister, Mario Monti, informed the French president of Italy's determination to take action in this field (see EUROPE 10526). France and Italy have expressed their agreement on how to tackle the crisis. Sarkozy declared that “all European institutions have to assume their responsibilities, just as each eurozone member state has had to do so”. Monti asserted that it is essential for member states to consolidate their public finances and implement reforms and that at an EU level all decisions must be taken to restore the markets' confidence in the euro and subsequently help bring down sovereign debt interest rates to “more coherent levels for the real economies”. This message is expected to be addressed at the European Central Bank, which, according to France and Germany, could do more to stabilise the situation. (MB/transl.fl)