Merkel set to face down France and Italy over pleas for action in eurozone crisis as world leaders meet for summit

Give us some slack: German Chancellor Angela Merkel said even Europe's strongest economy must not be overburdened

Πηγή: MailOnline

By MATT BLAKE
June 28 2012

• The German Chancellor spoke on the eve of EU summit
• Fears that leaders have never been more divided
• Italy and Spain want rapid action to lower their soaring borrowing costs
• France wants eurozone countries to share joint liability for each other's debts.
• It comes as Britain plans to pump another £1billion into propping up the eurozone’s stricken economy

German Chancellor Angela Merkel is preparing to square up to France and Italy over their pleas for emergency action in the eurozone crisis.

Instead she will demand that they roll up their sleeves and join in with the effort to clean up Europe's existing financial mess.

Her put down comes on the eve of the EU's 20th summit since the crisis began and as Britain unveiled plans to pump another £1billion into propping up the eurozone’s stricken economy – a move critics have called a ‘backdoor bailout’.

Italy, along with Spain, have begged Germany for rapid action to lower their soaring borrowing costs, while France wants eurozone countries to share joint liability for each other's debts.

But on the eve of the EU summit, which is due to start at 2pm British time, Merkel brushed aside their demands, accusing top EU officials of getting their priorities wrong.

'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 [on national budgets and economic policies],' she told parliament in Berlin today.


Friends or foes: Mrs Merkel talks to (right to left) Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy at a meeting in Rome last week

French President Francois Hollande is championing joint 'eurobonds' to bring down borrowing costs for the weaker euro zone countries as the pool of guarantors would include the strongest - meaning Germany.

But before the summit - the EU's 20th since the crisis began - Merkel repeated her objections to the plan, saying even Europe's strongest economy must not be overburdened.

The German chancellor said she did not expect to see the introduction of debt-sharing measures ‘as long as I live’.

But as Spain’s borrowing costs approached the 7 per cent danger zone yesterday, its prime minister, Mariano Rajoy, warned: ‘We can’t continue for a long time to finance ourselves with these prices.’

The EU’s 27 leaders first met to discuss the crisis formally at a summit in February 2010, when they agreed to ‘stand behind’ failing Greece.

David Cameron is expected to announce today that the UK will hand over £1.3billion to the European Investment Bank as part of an EU-wide growth plan.

The initiative – to be unveiled at a summit in Brussels, the 19th since the euro crisis began – came after demands by France’s new Socialist president, Francois Hollande.

Mr Cameron is expected to argue that kickstarting growth in Europe could have knock-on benefits for Britain.The EIB has also directly funded a number of projects in the UK.

In return, the Prime Minister is demanding that EU leaders sign up to reforms to boost competitiveness in their own economies.

The deal is designed to distract attention from continued infighting over radical measures to save the euro.

However, the decision is likely to anger many Conservatives and taxpayers. Britain is already liable for £12billion as a result of the bailouts of Ireland, Portugal and Greece.

Mr Cameron is also likely to come under pressure to hand over more cash to the European Commission after it warned yesterday that it was running £3.5billion over budget.

Eurosceptic Tory MP Douglas Carswell said: ‘It is just more money wasted. What part of “stop giving them more money” does the Government not understand?


Bailout: Prime Minister David Cameron is expected to announce that the UK will give £1.3billion to help the EU economy

‘They know they can’t get more money voted through Parliament and this seems like a way of achieving the same result by the backdoor.

‘If there is £1billion going spare I would much rather it was spent here delaying the fuel duty rise for another year or fixing potholes in my constituency.’

Christopher Howarth, of the think- tank Open Europe, added: ‘This feels an awful lot like spending for the sake of spending without doing anything to solve the eurozone crisis. We fear this won’t be good use of taxpayers’ cash.’


EUROPEAN LEADERS NEVER MORE DIVIDED

The summit is the 20th between leaders of the 27 EU states since the crisis erupted in early 2010.

The many meetings has given them a reputation for failing to match their talk with decisive action.

But EU leaders go into a Brussels meeting today more openly divided than at any time since the euro crisis began.

Germany's Chancellor Angela Merkel shows no sign of relenting in her refusal to back other countries' debts.

But French President Francois Hollande is championing joint 'eurobonds' to bring down borrowing costs for the weaker euro zone countries as the pool of guarantors would include the strongest - meaning Germany.

Meanwhile Spain is desperate for support for its ailing banks.

But Germany does not want to use its credit rating to support other members unless they first agree to share control of taxing and spending powers.

She is being urged at home to stay tough and reject all efforts to make Germany underwrite European partners' debts or banks, while her EU partners say that may be the only way to save the single currency.

'Nein! No! Non!' shouted a headline splashed across the front page of the normally sober German business daily Handelsblatt, with a commentary by its editor-in-chief saying Merkel must remain firm at the two-day summit.