Angela Merkel on Sunday urged Europe to stand firm in the face of market pressure and the “dramatic crisis” gripping the eurozone, insisting the solution was for states to slash public debt and boost competitiveness.
“Politics cannot and will not simply follow the markets”, Germany’s chancellor said, repeating her refusal to countenance funding indebted nations with a bond guaranteed by all members of the single currency bloc. Ms Merkel was backed by Wolfgang Schäuble, her finance minister, who said the eurozone would become an “inflation community” if countries opted to sell a joint bond without first unifying their fiscal policies.
In her most comprehensive rejection of the [eurobond] idea so far, Ms Merkel spoke of legal hurdles including lengthy ratification of an amended EU Treaty and possibly tricky changes to the German constitution. “Solving the current crisis won’t be possible with eurobonds and that’s why eurobonds are not the answer”, Ms Merkel told German television. Instead, states should continue to tackle the markets’ crisis of confidence “at the roots” by pursuing the “extremely difficult task” of improving competitiveness and growth.
“The ‘debt union’ has to be replaced by a ‘stability union'”, she said. “This is a hard and arduous path, which we will not be able to avoid by means of some magic bullet, like issuing eurobonds.”
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© Financial World / Nicolas Véron
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