G-20 urged to accelerate global market reforms
But Sarkozy and Merkel play down differences over austerity measures
GERMAN Chancellor Angela Merkel and French President Nicolas Sarkozy urged the Group of 20 to do more to tighten financial-market regulation, while playing down their differences over how fast to reduce government debt.
Ms Merkel and Mr Sarkozy, speaking after talks in Berlin yesterday, said they were sending a joint letter to the current head of the G-20, Canadian Prime Minister Stephen Harper, to press for a global banking levy and a financial transaction tax at the summit of industrial and emerging nations in Toronto June 26-27.
"We're not yet satisfied with what's been achieved since the first G-20 and we think we have to forge ahead on regulation," Ms Merkel said. It's the second letter in five days from Mr Sarkozy and Ms Merkel, after they urged the EU to speed up curbs on speculation, saying some bets against stocks and government bonds should be banned.
The leaders of Europe's two biggest economies made a show of unity after a planned meeting on June 7 was cancelled at the last minute, prompting reports of a Franco-German dispute over budget savings of more than €80bn announced by Ms Merkel the same day.
Mr Sarkozy, responding to a question about his differences with the chancellor, said that while he and Ms Merkel have "boisterous" talks at time, it's because they both want a thorough debate of all policy options. "We are quite frank people who have ambitions," he said. "We do not shun problems."
Eurozone countries are cutting budgets to avoid a spread of the sovereign debt crisis emanating from Greece. A €750bn EU rescue fund has so far failed to stem the slide, with the euro falling to a four-year low against the US dollar and more than €3.3tn wiped from global stock markets this year.
Germany "reacted very quickly" in drafting cuts and all other euro countries need to follow suit, Norbert Barthle, the budget spokesman for Ms Merkel's Christian Democrats, said yesterday, urging France to announce more detailed budget-cutting steps.
"Greece has understood and Spain has understood, too," Barthle said. "We need progress from those that aren't on the way yet," including France.
Mr Sarkozy has said he will cut France's deficit to 3pc of economic output in 2013 from 8pc now. That would mean €45bn of reductions in public spending, Prime Minister Francois Fillon said three days ago. (© Bloomberg)