Merkel says eurobonds are 'exactly the wrong answer'

 

Germany renewed its opposition to growing calls for a move towards bonds that are jointly issued by eurozone members yesterday, with the German Chancellor, Angela Merkel, saying that so-called eurobonds were "exactly the wrong answer" to the currency union's sovereign debt crisis.

The rejection follows a fortnight of turmoil on the world markets, with investors increasingly anxious about what they see as the lack of political will to solve the eurozone debt crisis. Last week also saw the Wall Street investment bank Morgan Stanley highlighting Europe's "slow and insufficient response to the sovereign crisis" as one of the reasons for a downgrade of its economic-growth forecasts.

But Ms Merkel rebuffed the clamour for eurobonds as a solution to the Continent's problems.

"They lead us to a debt union and not a stability union," she told German public television yesterday. Instead, Ms Merkel said Europe needed to move towards more economic co-operation.

"The eurozone has to work even more closely together but we also have to work together closely within the Europe of 27," she said. "Our currency is not substantiated by a political union. Now the task is to make the euro strong through more economic co-operation and, especially, more commitment."

Earlier, her finance minister, Wolfgang Schäuble, had also opposed the idea. Speaking at his ministry's open day on Saturday, Mr Schäuble said: "As long as we don't collectivise financial policy, we also cannot have a uniform interest rate level. The different rate levels are the incentive to run a solid economy or the punishment if you are not running it properly."

Ms Merkel's resistance echoed her stance at talks with the French President, Nicolas Sarkozy, last week.

On the other side of the divide, the Belgian finance minister, Didier Reynders, has backed the call for eurobonds, an idea also supported by his Italian counterpart, Giulio Tremonti, who was one of the first proponents of the idea to issue joint debt.

In addition to concerns about the implied loss of sovereignty, Germany's opposition stems from its fear of the higher interest rates that would land at its door, even as common debt offers some respite to the troubled, debt-laden countries on Europe's southern periphery.

With the political debate still raging, this weekend also saw the head of Germany's second-largest lender call for a European finance minister with authority to member states' budgets.

Writing in the German press, Martin Blessing, the chief executive of Commerzbank, said: "We need a real European finance minister, who is endowed with the appropriate powers. With the introduction of a fiscal union, Brussels should have the right to take budgetary powers from countries that do not stick to the rules."

"It should have the right to levy its own taxes and to set up a common debt agency to issue bonds."

Mr Blessing, whose bank is part-owned by the German government, also said that the measures put forward by Ms Merkel and Mr Sarkozy last week were not enough to solve the bloc's issues.

Among the proposals was a possible EU-wide financial-transaction tax, which has already stoked opposition in London, with Michael Spencer, the chief executive of Icap, the world's biggest interdealer broker, warning that it would "destroy the City and cost the Exchequer billions, but it would benefit Brussels".

"Companies like Icap will simply move elsewhere outside the EU if Nicolas Sarkozy and Angela Merkel push ahead with this silly tax," he told The Independent on Sunday.

Start your day with The Independent, sign up for daily news emails
News
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
news
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Manchester City's Etihad Stadium
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own