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16 October 2011

FT: Pressure grows for more Europe


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Across the German political spectrum, and among the nation's business and banking community, pressure is growing for “more Europe” as the answer to the plight of the eurozone.


The details of how such closer-knit integration would work are still up for debate, but the overall direction is backed by a clear majority of the ruling Christian Democratic Union, headed by Chancellor Angela Merkel, and her liberal Free Democrat partners. The German Federation of Industry (BDI), the powerful manufacturers’ association, is in favour, and so are the opposition Social Democrats (SPD) and Greens.

Last week the call for constitutional change to underpin more European unity even won support from Josef Ackermann, chief executive of Deutsche Bank, although he criticised the government’s handling of the current crisis.

The trouble is that Germany – the largest net contributor to the EU budget, the biggest single guarantor of eurozone rescue plans, and the motor of the European economy – seems to be way out in front of its partners in such thinking. The Netherlands and Finland are worried that Germany, with France, wants more “intergovernmental” deals, weakening the European Commission and Parliament. Paris says it backs Berlin, but in practice is much more hesitant. Ireland – where referendums are required for any treaty change – is openly hostile.

The idea that certainly would be on the table in any treaty-change negotiations – the introduction of jointly guaranteed eurobonds to help finance eurozone nation borrowing – is only backed in Germany by the SPD and Greens.

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© Financial Times


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