UK and Germany remain at odds over route to economic stability

0
Have your say

PRIME Minister David Cameron and German Chancellor Angela Merkel remained at odds over how to bring economic stability to Europe following key talks in Berlin yesterday.

Mr Cameron said it was “obvious” that he and Mrs Merkel had differences, but insisted they would work together to resolve the current crisis and promote growth.

Both agreed that a strong single currency was in Britain’s and Germany’s interests and that “decisive action” was needed to shore it up.

However there are major differences in how they believe this should be achieved.

The Prime Minister stuck to Britain’s position that it is for the eurozone countries and institutions including the European Central Bank to provide financial support for the single currency.

“All the institutions of the eurozone have to stand behind and back and do what is necessary to defend it,” he said.

German foreign minister Guido Westerwelle warned it would be a “momentous mistake” to ask the ECB to act as a lender of last resort by printing money to help ailing eurozone economies.

He said: “Putting the ECB’s printing presses to work might at best bring some short-term relief.

“But it would have dire consequences, both raising inflation and dissipating vitally important incentives for reform.”

Meanwhile, Mrs Merkel acknowledged that no progress had been made on a Europe-wide Financial Transactions Tax, which Germany wants to use to help fund single currency bailouts but which Mr Cameron believes will unfairly hit the City of London.

The Chancellor also made clear that Germany will press ahead at the forthcoming European Council summit on December 9 with proposals for “limited” treaty change to tighten the fiscal discipline of the eurozone.

She said it was crucial to enforce rules which meant “that national governments abide by their commitments.” The proposed change would only affect countries within the eurozone.

Mr Cameron agrees that rules for fiscal discipline are needed but is thought to be wary of tinkering with treaties as it could spark backbench Tory calls for a referendum.

Papering over splits: Page 4.