Sarkozy told reporters that he and Merkel want a "true European economic government" that would consist of the heads of state and government of all eurozone nations.
The leaders of France and Germany called Tuesday for greater economic discipline and unity among European nations but declined to take immediate financial measures seen by many investors as the only way to halt the continent's spiraling debt crisis.
The Dow Jones industrial average fell, the euro slid against the dollar and key European markets edged down in off-hour trading after Chancellor Angela Merkel of Germany and French President Nicolas Sarkozy announced the results of their emergency talks in Paris.
Sarkozy called for a "new economic government" for Europe that would meet at least twice a year with European Union President Herman Van Rompuy as its head, but he offered few other details or indications that the body would have real power.
Merkel and Sarkozy also called for all eurozone nations to enact constitutional amendments requiring balanced budgets. They said they want the process completed by the summer of 2012, but it would almost certainly run into protracted political difficulties in many countries.
Both leaders said the moment was not right to replace 17 government bonds with a single one allowing weaker economies to borrow in cooperation with the powerhouse economies of France and Germany. A growing number of experts are calling for the eurobond as a way to prevent the unaffordable interest rates that have driven Greece, Ireland, and Portugal to seek bailouts from the eurozone countries and the International Monetary Fund.
New figures show slowing French and German growth, and the German government fears it would face higher borrowing costs and more risks if it had to borrow jointly with financially shaky nations.
"We have exactly the same position on euro bonds," Sarkozy said. "One day we could imagine them, but at the end of a process of European integration, not at the beginning."
The two leaders also proposed a Europe-wide tax on financial transactions and pledged to harmonize their countries' corporate taxes in a move aimed at showing the eurozone's largest members are "marching in lockstep" to protect the euro.
Sarkozy told reporters that he and Merkel want a "true European economic government" that would consist of the heads of state and government of all eurozone nations.
The move appeared a step toward the closer long-term economic integration that many analysts have said is inevitable to make the euro experiment survive, though it was unclear how much effect it would have in the short term.
"There has to be a stronger coordination of financial and economic policy" to protect the euro, Merkel said.
Reuters
Posts
