It was not what investors had been hoping for but the leaders of France and Germany have favoured closer economic cooperation in the euro zone as a way to restore confidence in the single currency.
At their summit in Paris, Chancellor Angela Merkel and President Nicolas Sarkozy put their faith in an integrated fiscal policy.
German Chancellor Angela Merkel said: “Our proposals are aimed at regaining the confidence of the markets through our actions.We are convinced that by permanent action and thanks to in-depth work, we will be able to regain this confidence.”
There was also the idea of a common tax rate between the two countries to show the euro zone’s largest members were united in their ideas of how to protect the euro.
But Pieter Cleppe, Head of Open Europe, Brussels office is not convinced: “They fail to see that actually the problems that have emerged in the euro zone are not due to budgetary policy; they are due to monetary policy, due to the fact that it is very hard to have a single monetary policy for the whole of the euro zone. When Germany was growing very slowly, Spain and Ireland were growing very fast, and then to keep interest rate low is very damaging for the last two countries.”
But both leaders want all 17 euro zone countries to commit to balanced finances and to write that goal into their constitutional law by summer 2012.