France and Germany remain sharply divided on their priorities for closer economic integration in the 17-member eurozone, on the eve of a two-day summit in Brussels that is supposed to lay down guidelines for the next step to reinforce the European economic and monetary union, reports The Financial Times.
Angela Merkel, the German chancellor, wants the European Council to focus on new rules to improve competitiveness throughout the common currency area before she will discuss putting any new money on the table in the form of a eurozone budget.
She also wants to leave complex negotiations on establishing a single banking supervisor for the eurozone – the first step towards a banking union – for finance ministers to decide.
François Hollande, the French president, is adamant that progress must be made on agreeing a eurozone budget, as well as steps towards common debt issuance by eurozone member states, before he will sign off on new ways to enforce progress on structural reforms to boost competitiveness. He is also pressing for swifter agreement on bank supervision.
“If we accept (the need) to co-ordinate reforms and growth and competitiveness policies, it is logical that there should be access to eurozone instruments, such as a budgetary capacity or common borrowing,” a French official said.
The differences that emerged from separate briefings in Berlin and Paris mean that expectations of a big step at the summit towards closer co-ordination, with the European Commission getting substantial new powers to drive economic reform, are already being played down.
Read more of this report from The Financial Times.