Eurozone master plan unveiled as clock ticks

 
President Nicolas Sarkozy and Chancellor Angela Merkel. 5 Dec 2011 Both President Sarkozy and Chancellor Merkel have made concessions

This master plan delivered by President Sarkozy and Chancellor Merkel is aimed at delivering one simple, clear message: That the eurozone will never again allow member states to over-spend and run up large deficits.

"What we want," said President Sarkozy, "is to tell the world that in Europe the rule is that we pay back our debts and reduce our deficits."

If these measures are approved, the eurozone will have taken a giant stride towards becoming both a monetary and a fiscal union.

Some sovereignty over tax and spending will have passed to Brussels, although how much will only become apparent over the weeks ahead.

There will be automatic punishment for any government that allows its budget to exceed 3% of GDP.

Countries will be required to enshrine in law a promise to balance their budgets. Some parliaments may baulk at limiting their freedom to decide on spending plans in the future.

Both Chancellor Angela Merkel and President Nicolas Sarkozy have made concessions.

'Surrender'

The Germans have accepted that the European Court of Justice will not be able to veto budgets but President Sarkozy has had to accept automatic sanctions for those who break the rules.

He has also conceded that eurobonds - common European debt - is off the agenda for the time being.

It is, however, the German vision that has sustained - tough discipline to keep budgets in check and austerity to drive down deficits.

The French Socialists who are challenging President Sarkozy in the election early next year say "austerity" was the big winner by a knockout. They judge that Nicolas Sarkozy has "surrendered" before the "German Conservative government of Angela Merkel".

As for Britain, Prime Minister David Cameron will face a tough decision as to whether he tries to win back powers from Europe in exchange for British support for a treaty change.

The biggest doubt that hangs over all this is, firstly, time.

The negotiations will go on for months and then there is underlying reality - none of these measures explain how the huge debt mountains will be brought down at a time of almost zero growth.

 
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  • rate this
    +2

    Comment number 17.

    I dont think Germans have the time to relax around the pool...they are so busy working to pay for the rest of the EZ.

    Oops now im going to end up with people with torches outside my house--Thank God no one knows where I live....right?, right? (oh please I hope not)

  • rate this
    -6

    Comment number 16.

    Germany failed to conquer Europe via the First World War.
    Germany failed to conquer Europe via the Second World War
    Will Germany conquer Europe this time via the EU?

  • rate this
    +4

    Comment number 15.

    3.Jedra
    >Problem with a referendum is that it will become one big
    >marketing spin with not necessarily the outcome that is best >for the country.

    Business as usual, then.

  • rate this
    0

    Comment number 14.

    Of course German model is prevailing here. It is the most successful, it is the only that works, it is Europe that wants German people to pay from their pockets for somebody else´s lavish lifestyles. So it is the least that they ask, that they have some saying in how this money is spent, because experience shows Latineuropean countries are not to be trusted

  • rate this
    -3

    Comment number 13.

    This should have been part of the original Eurozone agreement. Years ago people warning about loose budgetary controls and pointing to the Greeks as being problematic.

    This is a good thing. Europe is a good thing. The problem is that politicians can't help themselves from oozing bile about it so you never hear a balanced debate.

    The EU needs many reforms to make it work. This is a first step.

  • Comment number 12.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 11.

    The big problem is that each country is relying on growth, when growth isn't physically possible now that we have reached "peak oil".

    EU leaders must limiting population growth and start an ordered transition to a low carbon economy. And they're got to do it quickly.

    While they believe (or pretend to believe) in growth it's probably safer to pull out of the EU.

  • rate this
    -4

    Comment number 10.

    Public and private greed from all nations created a dire situation but no point crying over spilt milk. How about, for a change, some cooperation for the general good - the same as is needed for man-made global climate change.

  • rate this
    +3

    Comment number 9.

    Oh that is going to go well with new Eurozone members. Bad debt needs to be payed or forgiven there are only two options. Nobody can pay its debt with out work. Imposing strict austerity simply forces more people on unemployement, and those people end up relying on social programs which in turn inflate deficit over 3%. Does anybody else see insanity in that approach ?

  • rate this
    -6

    Comment number 8.

    1.HaveIGotThatWrong

    Is your idea of a referendum either 1.Shoot self in head or 2.Declare war?

    What could possibly be THE question? It can only be IN or OUT! There are no half measures. It is like the proverbial question face by women all over the World either I am pregnant or I am not. There is no middle way. The British either work with their friends or they don't. Don't fool yourself!

  • rate this
    +6

    Comment number 7.

    This 'deal' remains a fudge.

    It'll take months. Meanwhile Greece remains in de facto default while Italian and Spanish borrowing levels remain unsustainable.

    The markets will be happy.... for about 10 days. Maybe less.

  • Comment number 6.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -2

    Comment number 5.

    To hold a referendum and subsequently distance ourselves from Europe will be a disaster for the UK. This crisis will eventually be solved and we cannot afford to be left behind. We must somehow embrace Europe, not reject it.

  • rate this
    +4

    Comment number 4.

    Yes - stringent financial controls that will constrain most EZ countries to a generation of economic stagnation and no growth - due to lack of flexibility etc.

    What a master stroke for Germany - top dogs of Europe - deckchairs and towels ready by the pool.

    When 'weaker EZ countries' see the small-print of what is proposed in Treaty - some will be concerned & demand opt outs & concessions

  • rate this
    +5

    Comment number 3.

    We elect our government to make decisions on our behalf. Problem with a referendum is that it will become one big marketing spin with not necessarily the outcome that is best for the country. Personally I do hope we stay well clear of any new treaty and back out of Europe now. Losing economic autonomy is just one step along the road to losing the rest.

  • rate this
    0

    Comment number 2.

    Germany and France bullying the rest of the unsuspecting Eurozone and expecting them all to fall in line

  • rate this
    +9

    Comment number 1.

    Surely The Coalition can’t possibly deny the citizens of the UK a referendum on the EU now?

    And yet they are already coming up with reasons to weasel out of it.

    If no Government ( past or current ) will allow us a referendum, it makes you wonder who really is running the show ?

 

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