Despite growing anxiety about the global financial crisis, Europe’s leaders have been unable to come up with a consensus on how to head off economic turmoil.
Dutch Prime Minister Jan Peter Balkenende, in talks with French President Nicolas Sarkozy today, has suggested that member states reserve three percent of their gross national product as emergency funding for their respective banking systems.
But the EU is deeply split on the idea of a common rescue fund, with Germany leading the opposition. Sarkozy will host a summit of the EU’s four big economies and the bloc’s financial chiefs on Saturday.
France has denied it will propose a 300 billion euro safety net at the meeting. Ireland’s decision to act unilaterally has spurred Brussels into action. Dublin announced it was underwriting Irish banks in the interests of depositors. While there was a mixed response across the Union, Britain reacted angrily, questioning the legality of the move.
In the UK, some people have been transferring their savings to those protected Irish banks.
Analysts believe the European Commission might be reluctant to take action against Ireland at a time when Brussels is trying to persuade the Irish to reverse their vote against the EU reform treaty.