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France and Germany put forward EU competitiveness pact proposal

France and Germany were united in proposing a European “competitiveness pact” that is  aimed at eliminating all policy differences threatening to weakened the eurozone.

A pact such as this could mean that eurozone governments following the example set by Germany’s making it an official constitutional violation if limits on national debt are exceeded. During talks at a Brussels summit, the plans met widespread resistance. While there was talk of being able to hold a special eurozone summit in March, no decision has been taken yet.

In the Belgian capital, German Chancellor Angela Merkel professed to other EU leaders her belief that the euro needs be defended and be a part of a political project.  Under the plans, the practice of having to index-link increases on salaries to inflation – customary in both Belgium and Portugal – would have to be scrapped.

Speaking with French President Nicolas Sarkoy, Merkel continued to explain that it is her intent to establish a pact for competitiveness, making it very clear that Europe intends to grow together and a lot closer on a political level than at present.

When he spoke, Mr Sarkozy called for more convergence as well as integration of European economies.  At present, many analysts have thrown attention on the fact that economic performances across the eurozone are languishing in a gulf that has undermined continental confidence in the euro. While German exports surge ahead , Spain languishes is struggling in the doldrums and has record levels of unemployment.



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