Deeper Eurozone Union ‘Agreed’ – Germany’s Merkel
EU leaders have agreed on a roadmap for eurozone integration beyond the deal on centralized banking supervision, German Chancellor Angela Merkel said.
Specific dates have not yet been agreed for the phases of integration.
But the EU summit chairman, Herman Van Rompuy, said a deal should be reached next year on a joint resolution scheme for winding up failed banks.
Mr Van Rompuy’s far-reaching roadmap was the main topic of the two-day Brussels summit.
Speaking after the summit talks, French President Francois Hollande said: “There is no doubt today about the integrity of the eurozone – Europe cannot now be taken by surprise.”
But beyond the banking reforms, he said, Europe must address the problems of unemployment and feeble growth.
The deal to make the European Central Bank (ECB) the chief regulator should pave the way for direct recapitalization of struggling eurozone banks by the main bailout fund, the 500bn-euro (£406bn; $654bn) European Stability Mechanism (ESM).
Spain is especially anxious to get that help for its debt-laden banks.
Direct recapitalization would help break the “vicious circle” in which bank debts have put a crippling burden on national budgets and led to massive taxpayer-funded bailouts.
However, Germany insists that the ESM should not be used to write off the existing “legacy” debts that have burdened Spain, Greece and the Republic of Ireland. Any ESM loans will be accompanied by tough rules on budget discipline.
June deadline
At a late-night news conference, Mrs Merkel said “we agreed a roadmap for the future development of the currency union and talked about different aspects of this that are important.
“Above all, it was important to define when we do what.”
Mr Van Rompuy aims to present detailed plans for deeper economic integration in time for the June 2013 EU summit. They would include “mutually agreed contracts for competitiveness and growth between governments and EU institutions”.
Much closer EU scrutiny of national budgets is envisaged, including penalties if governments rack up unsustainable debts.
Contractual agreements on things such as taxation and labor market policy are likely to require changes to the EU treaties – so these are likely to be put off until after the European elections in mid-2014.
The UK, along with Denmark, has a formal opt-out from joining the euro, and will not be part of the new banking union. But the UK’s banking pre-eminence in Europe means it is taking an intense interest in the negotiations.
UK ‘at heart’ of EU
At a news conference after the summit, UK Prime Minister David Cameron said a “multi-faceted” Europe, with countries going at different speeds, did not leave the UK in an uncomfortable position.
At a late-night news conference, Mrs Merkel said “we agreed a roadmap for the future development of the currency union and talked about different aspects of this that are important.
“Above all, it was important to define when we do what.”
Mr Van Rompuy aims to present detailed plans for deeper economic integration in time for the June 2013 EU summit. They would include “mutually agreed contracts for competitiveness and growth between governments and EU institutions”.
Much closer EU scrutiny of national budgets is envisaged, including penalties if governments rack up unsustainable debts.
Contractual agreements on things such as taxation and labour market policy are likely to require changes to the EU treaties – so these are likely to be put off until after the European elections in mid-2014.
The UK, along with Denmark, has a formal opt-out from joining the euro, and will not be part of the new banking union. But the UK’s banking pre-eminence in Europe means it is taking an intense interest in the negotiations.
UK ‘at heart’ of EU
At a news conference after the summit, UK Prime Minister David Cameron said a “multi-faceted” Europe, with countries going at different speeds, did not leave the UK in an uncomfortable position.
