France and Germany Wednesday upped the pressure on their euro zone peers to improve fiscal discipline in the bloc by cutting the regionĪs wayward spenders off from key European Union transfer funds.
In a letter sent to European Council President Herman Van Rompuy, French President Nicolas Sarkozy and German Chancellor Angela Merkel recommended that payments from the EU aid fundĪs to euro area members states with “excessive budget deficits” be suspended.
They also said that money from EU structural and cohesion funds not used by euro area countries receiving bailout money should be pooled in a new fund. This new fund should be managed by the European Commission in order to bolster growth and improve competitiveness in the euro zone, Sarkozy and Merkel wrote in the letter.
These proposals are part of a wider initiative unveiled Tuesday by France and Germany to improve governance in the euro zone in a bid to ease market fears that debt woes from the regionĪs weakest peripheral countries will spread to the core of the region.
Among SarkozyĪs and MerkelĪs main proposals is the creation of a new job of euro zone president to help better coordinate macro economic policies in the bloc, to hold regular meetings of euro zone leaders and to closely coordinate French and German budget planning.
(source: Dow Jones)
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