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European banking system needs redesign to prevent another crisis

The new government will take office on March 9 (Ash Wednesday, as it happens) and will face immediately the task of forging a response to the Franco-German plan to resolve the Eurozone crisis unveiled at the Brussels summit last Friday week.

It calls, as these documents invariably do, for greater integration of European economic policy. The main proposals are for closer harmonisation of tax and spending policies, including constitutional limits on borrowing, a common approach to corporation tax, higher retirement ages in state pension systems and an end to wage indexation. The theme is a more competitive Europe with better fiscal discipline.

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