Eurozone's big four put hopes in €130bn growth package

Agreement is a triumph for François Hollande who pledged to shift emphasis from austerity

The eurozone's four most important leaders yesterday announced a €130bn growth package designed to pull the single currency out of its downward economic spiral.

The French President, François Hollande, the German Chancellor, Angela Merkel, the Spanish Prime Minister, Mariano Rajoy and the Italian Prime Minister, Mario Monti, promised the funds – equivalent to 1 per cent of the European Union's GDP – at a joint summit in Rome.

The agreement is an achievement for Mr Hollande who was elected on a promise to shift the focus of the eurozone's crisis-fighting measures from budget cuts to growth stimulus. "I absolutely agree with what everyone else here has said – to devote 1 per cent of the GDP of the European area to growth, to efficiency and to investment," said Ms Merkel at a joint press conference yesterday.

The package is expected to be made up of accelerated spending of funds already in the European Union's budget, as well as an increase in lending by the European Investment Bank. The Rome summit's host, Mario Monti, stressed that severe deficit-reduction policies across Greece, Ireland, Portugal, Spain and Italy needed to be offset by measures to boost growth if they were to succeed. "Growth can only have solid roots if there is fiscal discipline, but fiscal discipline can be maintained only if there is growth and job creation," he said.

Spain and Italy have seen their borrowing costs rise to dangerous levels in recent weeks as their economies have sunk into recession, and investor alarm has grown that they could require a full bailout. All of Europe's leaders will gather for a summit in Brussels next Thursday, where they are expected to announce plans for a pan-European banking union in order to reassure depositors their savings will not be devalued.

The IMF put pressure on Europe's leaders earlier this week to go much further, urging the European Central Bank to recommence its sovereign-bond buying programme and for the eurozone to mutualise its debt. Those measures will be on the table in Brussels, but they are still being fiercely resisted by Ms Merkel. Mr Monti said Europe's leaders must use the Brussels summit to show "that the euro is here to stay".

Mr Hollande piled more pressure on Ms Merkel on the subject of debt mutualisation at yesterday's press conference. "I consider euro bonds to be an option ... but not in 10 years," he said, referring to German arguments that common debt issuance can only follow closer fiscal convergence between member states.

Spain and Italy have also argued that European bailout funds should be used to buy Spanish and Italian debt directly on the secondary markets in order to reduce their borrowing costs. Ms Merkel has indicated that she might approve of this. Next week's summit will also discuss how to deal with Greece's request to be given more time to implement austerity measures.

Separately, Germany yesterday seemed to give up on plans to impose a European Union-wide financial transaction tax (FTT). At a meeting of European finance ministers in Luxembourg, the German representative, Wolfgang Schäuble, accepted there was no agreement across the 27 nations to impose the levy. However, he said that efforts would continue to impose the FTT among willing states. "My impression is that a number of member states strongly support the proposal of an FTT," said Mr Schäuble. "We should give it a try."

Arts & Entertainment
Madonna in her music video for 'Like A Virgin'
music... and other misheard song lyrics
News
Waitrose will be bringing in more manned tills
newsOverheard in Waitrose: documenting the chatter in 'Britain's poshest supermarket'
News
Russia's President Vladimir Putin gives his annual televised question-and-answer session
peopleBizarre TV claim
News
The energy drink MosKa was banned for containing a heavy dose of the popular erectile dysfunction Levitra
news
VIDEO
Sport
Australia's Dylan Tombides competes for the ball with Adal Matar of Kuwait during the AFC U-22 Championship Group C match in January
sportDylan Tombides was diagnosed with testicular cancer in 2011
Arts & Entertainment
Martin Freeman as Lester Nygaard in the TV adaptation of 'Fargo'
tv
News
Posted at the end of March, this tweeted photo was a week off the end of their Broadway shows
people
Arts & Entertainment
tvIt might all be getting a bit much, but this is still the some of the finest TV ever made, says Grace Dent
News
peopleStar to remain in hospital for up to 27 days to get over allergic reaction
Arts & Entertainment
Comedian Lenny Henry is calling for more regulation to support ethnic actors on TV
tvActor and comedian leads campaign against 'lack of diversity' in British television
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Apprentice IT Technician

£150.00 per week: QA Apprenticeships: This company is a company that specializ...

1st Line Technical Service Desk Analyst IT Apprentice

£153.75 per week: QA Apprenticeships: This company is an innovative outsourcin...

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Sales Associate Apprentice

£150.00 per week: QA Apprenticeships: We've been supplying best of breed peopl...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit