Thursday 22 February 2018

Merkel: EU treaty changes needed for ‘lastingly stable’ euro

Angela Merkel said that Germany's goal is 'that the euro is lastingly stable. Photo: Bloomberg News
Angela Merkel said that Germany's goal is 'that the euro is lastingly stable. Photo: Bloomberg News

German Chancellor Angela Merkel said that changes to the European Union’s guiding rules are necessary to help ensure euro stability, picking a fight with fellow EU leaders reluctant to rewrite the treaties.

Merkel, addressing lower-house lawmakers in Berlin ahead of an EU summit in Brussels beginning tomorrow, said that Germany’s goal is "that the euro is lastingly stable." The debt crisis that buffeted the euro region was "existential," she said.

"We’ve got it under control, but that alone isn’t enough," Merkel said. "We have to get moving now, not when Europe is up to its neck" in a future crisis.

An agreement forged with French President Nicolas Sarkozy last week to deter EU nations from running excess budget deficits will mean sanctions can be imposed more quickly than in the past, she said.

Treaty changes to avert future crises are also necessary, though they won’t be easy to agree and "there isn’t much time" to secure them, she said.

Merkel held to her position, formulated in May as she granted aid to Greece, in the face of growing resistance to her plans.

The UK has said it opposes any attempt to transfer powers to the EU to cap budget deficits, and Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, said Merkel won’t win the requisite support for her proposal to withdraw voting rights should states violate deficit rules, Die Welt newspaper reported today.

‘Wrong signals’

In her speech, Merkel said that she won’t accept a "simple extension" of the EU’s €440bn rescue fund established in May -- located in Luxembourg and headed by a German, Klaus Regling -- as a backstop in the event of a future crisis.

Extending the fund beyond its three-year remit would send the "wrong signals to markets and member countries" that taxpayers will bail out debt-laden governments, she said.

She defended her pre-summit accord with Sarkozy, saying that German-French unity is necessary for any EU progress. The EU needs Germany to be on board just as much as Germany needs the EU, she said.

The debate over treaty overhaul risks detracting from the need to "get the EU budget under control," UK Prime Minister David Cameron told lawmakers in the House of Commons today.

"This is an argument that’s being put forward particularly by the Germans, that there’s a new treaty clause needed to put the euro zone on a stronger footing," Cameron said.

"From our point of view we are not in the euro, we’re not planning to join the euro, so any treaty change wouldn’t apply to us."


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