Germany, France, Italy and Spain Agree to Growth Pact
The countries with the four-largest euro-zone economies agreed on Friday to an economic growth program with a total value of €130 billion ($163 billion). The sum represents 1 percent of the European Union’s gross domestic product, Italian Prime Minister Mario Monti said in Rome after a meeting with German Chancellor Angela Merkel, French President François Hollande and Spanish Prime Minister Mariano Rajoy.
Germany, France, Italy and Spain all agreed that growth measures undertaken so far have not been enough to pull Europe out of a debt crisis that is threatening to unravel the continent’s common currency, the euro. They also agreed that budget discipline alone will not be enough to fuel economic growth and create jobs for the mass of unemployed Europeans.
Chancellor Merkel said the plan was the “message we need.” She also admonished Europe to venture even closer political integration. The German leader said the four countries would support the introduction of the financial transaction tax that Germany and some others are demanding in order to help recoup part of the costs of the financial crisis from the markets. In Berlin, Merkel’s government cut a deal on Thursday with the opposition requiring the government to push for the tax in exchange for support from the center-left Social Democrats and the Greens for ratification of the permanent euro rescue fund, the European Stability Mechanism (ESM), and the EU fiscal pact. Merkel said that the financial markets have not yet sufficiently contributed to the costs of managing the crisis.