"I am convinced that more economic coordination is important for the markets. It's about the credibility of the eurozone. We discussed it a lot, but to be honest there is still more work to be done on this", Chancellor Angela Merkel said in a press conference after the first EU summit day in Brussels.
She said the delay until October was mainly due to the EU elections taking place in May - as an initial plan was to reach an agreement by June. "I suggested we then postpone it until December 2014, but the presidents of the EU commission and the EU council said they still wanted to get it done during their term. There was a strong support to do it by October", Merkel said.
She admitted it was not easy to convince her peers of the necessity for more economic coordination, as the link between economic reforms and national borrowing costs was not as direct as with public deficits or the situation of a country's banking sector. "I am happy to continue the discussion. We will advance millimetre by millimetre", Merkel said.
Germany has already got what it wanted with a fiscal compact and more scrutiny for the EU commission on national budgets and reforms. But many of the EU commission's recommendations remain on paper and Merkel wants to see more "ownership" of reforms. "The word 'voluntarily' was eliminated from the final conclusions. Just to give you an idea how the discussions went", Merkel noted.
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François Hollande, France's president, said that the financial incentives would not be drawn from the EU budget, nor from eurozone funds since the so-called reform contracts would be available to non-eurozone countries as well. The financial incentives, he continued, could be drawn from the European Investment Bank or take the form of loans though this remained a subject under discussion.
José Manuel Barroso, the president of the European Commission president, struck a more upbeat tone when saying that EU leaders had agreed “on principles underlying contractual arrangements and solidarity mechanism". “This maintains the momentum to a deeper economic and monetary union", he added, although he recognised that the debate raised “sensitive issues”.
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