Angela Merkel and Nicolas Sarkozy calling for a new European Treaty because they are convinced that the euro is inextricably linked to European unity.

Nicolas Sarkozy received this morning in Paris Angela Merkel to tackle the most rugged and controversial issue of the crisis of the “sovereign debt” on the control of national budgets in the euro zone.After having had lunch with the Chancellor in the Elysee palace, seat of the presidency of the French Republic, the two leaders attending a press conference in which he made clear its position on the debt crisis.The Franco-German agreement shall be in writing on Wednesday, the president of European Council Herman Van Rompuy, and will be discussed by the Heads of State and Government of the 27 at the European summit on Friday.


The new European text

Nicolas Sarkozy and Angela Merkel made it clear what their purpose with this project that contains the reform of the Treaties of the European Union. “Our preference is a treaty among the 27, so that no one feels excluded”Said Sarkozy.However, the French president wanted to emphasize that are equally “open to a treaty between the 17 ” and “open to any state that wants to join us. “

The project includes the new Treaty European Union contains the necessary mechanisms to prevent evasion of the rules of public spending. In this sense, Angela Merkel was in favor of including a binding debt brake that can be verified by the Court of Justice.

Punishment for countries that exceed 3% of GDP in 2013

The new Treaty on European Union collect automatic penalties for states that break the norm of keeping the deficit below 3% of GDP in 2013. This tax measure is necessarily accompanied by a golden rule: get national constitutions guarantee a balanced budget.This arrangement permits continue to respect the “national sovereignty” and reveals that both the German Chancellor and French President are “absolutely determined to keep the euro as stable as a major contributor to European stability, ” as stated this evening the German Chancellor.

Refusal to issue Eurobonds

No compromise has been made by Angela Merkel in relation to Eurobond and skepticism has gotten dragged to his land on French President has shown sharp on this issue “In no case are the solution of the crisis. “Nicolas Sarkozy has stated that “How to convince others to do the efforts we are making ourselves if mutualized debts already? It makes no sense”.

European Central Bank Independence

Both leaders have expressed confidence in the respect for the independence of European Central Bank as a guarantor of European stability. However, they refuse to perform

comment on their activity.
Boosting EFSF

Both the German Chancellor and French President were in favor of including the proposed new European Treaty, the new conditions of European Financial Stability Fund and its operation.Angela Merkel and Nicolas Sarkozy have revealed their intention to accelerate the new conditions of this funding mechanism for the next year.

The market reaction

The hope of a possible solution to the crisis in Europe compels the world markets, according to data compiled by Reuters, although they remain looking forward to what will happen at the European summit scheduled for Friday.

Also in this day of top European shares closed with gains. Thus, the Milan stock exchange has seen a rise of 2’91%, and have followed the Spanish market with 1’72%, the Paris Stock Exchange 1.15%, the Frankfort with a 0’42% and London 0’28%. In the debt markets, Risk premiums were getting down to 400 points Italian to Spanish and 300 points to 100 points French.