During a joint press conference held at the end of the working day yesterday by German Chancellor Angela Merkel and French President Nicolas Sarkosy to announce their plans markets fell, dropping again slightly when they opened this morning. Part of the reason for this has been put down to analysts expecting bigger reforms than the ones put forward.
Their proposals include a requirement for each eurozone member to balance their budget as well as producing annual budgets on a “harmonised” economic outlook. At the same time they ruled out any increase to the €440bn European Financial Stability Fund.
The two would not commit to introducing eurobonds that the Italian finance minister, Giulio Tremonti, has called for. Sarkosy has reportedly said he would support them but only after greater European fiscal integration has been put in place first.
Other proposals include a common corporation tax by 2013 as well as a tax on financial transactions that France and Germany will introduce in September. Sarkosy would also like to see a eurozone president elected every two-and-a-half years, with current European Commission President Herman von Rompuy taking the role.
These announcements came a matter of days after France posted zero GDP growth and the quarter-on-quarter figure for Germany came in at 0.1%.
