PARIS – The leaders of France and Germany say the EU needs a revised treaty to deal with the eurozone debt crisis. The statement from French President Nicolas Sarkozy and German Chancellor Angela Merkel came after they held crisis talks in Paris, the BBC said.
They said eurozone states should face greater checks on their budgets and face sanctions for running up deficits.
Sarkozy said steps had to be taken to ensure that what had happened in Europe “must never happen again”. A detailed report on the Treaty change plan will be sent to EU Council President Herman Van Rompuy, the two leaders said.
“We need to change the legal framework depending on the realities. This is why we are so resolved to confer on that with our colleagues on Thursday and Friday,” Merkel said. Both she and Sarkozy underlined that Germany and France are the largest economies in the bloc and therefore have a higher responsibility in this matter.
The Franco-German meeting in Paris kicks off a week of meetings involving European leaders, the European Central Bank (ECB) and US Treasury Secretary Timothy Geithner, culminating in Brussels on Friday with an EU summit.
With financial markets putting pressure on some of the eurozone’s largest – and most highly indebted – nations, Sarkozy said the stakes were high. “What will remain of Europe if the euro disappears?” he asked. “Nothing.”
Merkel has promised “concrete steps towards a fiscal union” – in effect close integration of the tax-and-spend polices of individual eurozone countries, with Brussels imposing penalties on members that break the rules. “We need budget discipline and an effective crisis management mechanism,” she said last week. “So we need to change the treaties or create new treaties.”
Italy, Ireland preparing tougher austerity measures
Meanwhile, two badly-hit eurozone countries, Italy and Ireland, are preparing tighter austerity measures.
In Italy, Prime Minister Mario Monti is due to seek approval for his government’s plans in parliament. Monti said on Sunday evening his government has approved a package of emergency budget measures worth more than USD 40 billion that will help pull Italy back from the brink of bankruptcy, Voice of America said. Monti said the measures include immediate budget cuts as well as significant steps to fight tax evasion. To do his part to cut the spending, Monti said he will forego his salary as prime minister.
And Irish Prime Minister Enda Kenny has said the population must prepare for a tough budget this week. Public spending will be cut by EUR 2.2 bln a year and taxes raised by EUR 1.5 bln, with VAT increasing to 23%.