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EURO CRISIS

France to push for eurobonds in Brussels

Germany and France will overcome their differences and agree on solutions to the current crisis at the upcoming EU summit, French Prime Minister Jean-Marc Ayrault said in an interview Wednesday.

“I have no doubt that we will come to an agreement at the European summit in Brussels,” Ayrault told the German weekly Die Zeit in a pre-release of an interview to be published on Thursday.

“The governments know what is at stake. We have to ensure Europe’s financial stability and press ahead with our efforts to bring down debt and deficits,” he said.

“And we now have to take the road that leads to growth and jobs.”

There has been tension between Berlin and Paris over the way out of the long-running debt crisis, with German Chancellor Angela Merkel insisting that austerity is the way forward, while French President Francois Hollande sees kick-starting growth as paramount.

Paris has also been spearheading a campaign for common EU bonds or so-called eurobonds, effectively the pooling of debt of eurozone member states to drive down borrowing costs.

France and other eurozone states argue eurobonds could fund desperately needed growth policies after years of austerity have pushed some of their economies into recession.

But Germany is firmly opposed to such a move, arguing it takes away the pressure for reform in spendthrift countries and also undermines market discipline.

Berlin insists that a true fiscal union is needed first, with member states surrendering fiscal sovereignty, before eurobonds can be created.

“I want eurobonds to be discussed in Brussels,” Ayrault told Die Zeit.

“But it’s true that mutualisation of debt would necessarily entail deeper political integration and that will certainly take several years. But we shouldn’t wait until then to act. Time is pressing,” the French premier insisted.

Ayrault said it was “essential that this summit makes the decisions that will win back people’s confidence and offer a perspective for the European project.

“The answer so far has always been ‘austerity’. That is why doubts about the European project have arisen in every one of our countries, even in Germany,” he said.

A banking union was needed, with a single EU supervisory banking authority and a common deposit guarantee scheme, Ayrault argued.

Ways could also be found to make it easier for states to access financing, such as short-term bonds, or a recent suggestion for a debt redemption fund.  

And the region’s incoming bailout fund, the European Stability Mechanism should be able, under certain circumstances, to function as a bank and borrow money directly from the European Central Bank, Ayrault said, a proposal to which Germany is also opposed.

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CURRENCY

Majority of Germans now trust in the Euro

A survey published on Tuesday shows that German public trust in the single currency has risen sharply over the last two years to hit 57 percent.

Majority of Germans now trust in the Euro
Photo: DPA

The survey, carried out by the market research firm GFK Verein, shows the level of confidence in the Euro has risen 19 percentage points since they last surveyed attitudes in 2013.

“The background reason for this result is low inflation,” Ronald Frank, Head of Studies at GFK Verein told The Local.

“The consumer reacts to the things he buys on a weekly basis. Because the oil price is low and this has a knock-on effect on the price of petrol at the pump – and the price for good such as butter, bread and even beer has not risen, people feel the low rate of inflation.”

The survey measures attitudes to public institutions in 26 different countries on a biannual basis. In Germany, the sharp rise in trust in the Euro made it the fifth most respected public institution.

It is still some way off public trust in the police which was recorded at 80 percent.

Frank told The Local that the other main influence on the Euro's rise in popularity was that the public believes it has weathered the storms that have battered it in recent years.

“In 2012 the media had a tendency to talk down the Euro, but a few years later nothing has happened.”

It has now been established in the public mind that the worst fantasies of the media will not come true and the Eurozone will indeed stay together.

The survey also identifies a rise in support for the government from 34 percent in 2013 to 40 percent today.

Frank pointed out that this could have reinforced support for the Euro since the measures taken to support on the European level to strengthen the single currency  – the European Stability Mechanism (ESM) – came “significantly from Germany.”

But he warned that public attitudes on these issues can change quickly, saying that rising inflation or a large amount of tax money transferred to Greece as part of a deal on its debt could quickly see support for the Euro begin to fall away.

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