France and Germany have laid out their joint vision of how to fix the European economy amid the worst financial crisis for decades.
Paris dropped its proposal to create a new eurozone body to coordinate fiscal policy, accepting Berlin’s stance that all 27 EU members should be included.
President Nicolas Sarkozy and Chancellor Angela Merkel outlined what they hoped stronger economic government would consist of.
The French president said: “The markets, speculators, which are of course not the same thing, can react within a millionth of second…our procedure must be more efficient and more pragmatic. This entails economic government for the EU-27 and, when required, eurozone meetings to discuss the problems with the euro.”
Chancellor Angela Merkel added:“We agreed that we also might to think of changing the treaties, Germany and France will make proposals on that soon, and one thing could be the withdrawal of voting rights for countries which notoriously violate the deficit criteria, that is something that seems to be important to us, because we need here treaties with teeth in order to enforce a culture of stability and growth.”
Merkel’s insistence for tough sanctions is a nod to Greece’s fiscal woes.
As the two leaders spoke, it emerged that the Moody’s rating agency had downgraded Greek government bonds four notches to “junk” status.