Francois Hollande threatens to block eurozone’s new financial treaty

Mrs Merkel delivered a blunt message of her own however, telling France and
Greece not to abandon debt cutting policies in the wake of elections at the
weekend that saw both countries turn against the path of austerity.

“The European sovereign debt crisis will not be beaten overnight, there
is no magic bullet,” she said. “Growth through structural reform
is important and necessary. Growth through debt would throw us back to the
beginning of the crisis.”

Mr Hollande will meet Mrs Merkel for the first time since becoming French
president next Tuesday when he travels to Germany just hours after his
inauguration. There he will press his demand for a greater focus on growth
over dinner in the Chancery.

In a rare ray of light, the first hopes of a coalition government forming in
Greece emerged last night after the leaders of two socialist parties said
they would work together in order to keep the country in the euro.

After three days of stalemate Evangelos Venizelos, leader of Pasok, said that
he saw the first “good omen” in attempts to forge a government
that would avert the looming prospect of a new election.

He spoke after meeting Fotis Kouvelis, leader of Democratic Left, who outlined
a proposal for a unity government until 2014 that would strive to keep the
heavily indebted country in the euro and the European Union, while
negotiating a gradual “disengagement” from the harshest austerity
measures of the 130 billion euro.

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