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Franco-German master plan for EU

Monday, December 05, 2011 - 01:54

Dec 5 -The leaders of France and Germany have agreed a master plan for imposing budget discipline across the euro zone, saying the EU treaty will need to be changed in the search for a sweeping solution to its debt crisis. Ruairidh Villar reports.

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Going for the handshake, but getting a kiss. It may be only a greeting, but investors are watching every move by the leaders of France and Germany. Later this week the EU aims to hammer out a master plan for recovery. And at last, France and Germany seem to agree on a solution. French President, Nicolas Sarkozy. (SOUNDBITE) (French) FRENCH PRESIDENT, NICOLAS SARKOZY, SAYING: "The Franco-German agreement is very complete. It will be written up in a letter and presented to (European Council President) Herman Van Rompuy on Wednesday...We want to make sure that the imbalances that led to the situation in the euro zone today cannot happen again." The solution, they say, is a new treaty -- binding in the core 17 euro states but open to all 27 members of the EU. Gone is the idea of a common euro area bond to share the pain of struggling nations. And in its place, strict budget rules and sanctions -- for countries with deficit of more than 3 percent. German Chancellor Angela Merkel. (SOUNDBITE) (German) GERMAN CHANCELLOR ANGELA MERKEL SAYING: "We are in a difficult situation and we need to regain confidence, the acceptance of whether we are trustworthy in the euro zone, if we can live up to our responsibilities. As the belief that we can be taken at our word has suffered, many are worried about whether they can rely on us. And so at the summit on Friday we need to regain some of this confidence." In afternoon trading the FTSEurofirst index of top European shares was up 1 percent. But it may be too soon for investors to start their celebrations. For the plan to get approval it still has to run the gauntlet of yet another EU Summit later this week. Ruairidh Villar, Reuters.

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Franco-German master plan for EU

Monday, December 05, 2011 - 01:54