Merkel: Britain a Key Part of EU
German Chancellor Angela Merkel said that the UK will remain a strong EU partner, despite its decision not to sign up to an EU summit deal. While addressing the Bundestag (parliament), she said she very much regretted that UK PM David Cameron had been “unable to join us” on the path to fiscal union. Last week, 26 of the 27 members of the union backed the fiscal rules, with Britain abstaining.
Britain said the deal failed to provide safeguards for the City of London. Mrs Merkel was speaking after the euro fell below $1.30 and £0.84 – an 11-month low – amid continuing fears over the eurozone’s future. This deal came about from debt crises in several eurozone countries, and is intended to tighten rules to prevent member states running up further debts in future. But the only way to do this is to write budget prudence into the constitution of each member country, Germany says.
The chancellor said the countries had decided to have an “intermediate contract”. “I am convinced that if we have the necessary patience and endurance, if we do not let reversals get us down, if we consistently move towards a fiscal and stability union, if we actually complete the economic and currency union… then what I have always stated as our goal since the beginning of the crisis will come to pass,” she said. BBC
She also said that there would be penalties on countries that broke spending rules. She said a stronger and more stable Europe would emerge from the crisis. But there are fears that a budget pact will still not be enough to prevent more countries from seeking a bailout. Countries that had to be bailed all were Greece, Portugal, and Ireland, after they could no longer afford interest rates charged by lenders. And it looks like Spain and Italy may be next.
Right now, the EU doesn’t have a big pot of cash on hand to rescue larger EU countries requiring bailouts, but the deal envisaged signatories providing funds of up to 200bn euros for the International Monetary Fund to help tackle the crisis. Then isn’t it about time for those governments involved to cut spending?