EU heads start bank crisis talks

Silvio Berlusconi, Angela Merkel, Nicolas Sarkozy and Gordon Brown in Paris, 4 Oct

EU leaders are to seek a co-ordinated response to the financial crisis

The leaders of France, Britain, Germany and Italy have begun a mini-summit in Paris on the world financial crisis.

French President Nicolas Sarkozy, hosting the meeting, hopes the talks will forge a common European approach.

He is expected to propose better co-ordination between EU governments ahead of next week’s G8 meeting in the US.

Ahead of the talks, UK Prime Minister Gordon Brown said he wanted the early release of a 15bn euro (£12bn; $21bn) fund to help small businesses.

BBC Europe editor Mark Mardell says that going into the meeting, Mr Sarkozy had high hopes that he could persuade his fellow EU leaders to agree to something along the lines of the US financial sector rescue plan.

However, the Germans and Mr Brown seemed less keen on the idea, our correspondent says.

‘Trial by fire’

France wants countries to agree to intervene where necessary to protect European banks.

French Prime Minister Francois Fillon – describing the world as being “on the edge of the abyss” – said France would propose measures to unfreeze credit and co-ordinate economic strategies.

Dominique Strauss-Kahn, IMF head
It has to be indicated to the markets… that European countries will not react as every man for himself

Dominique Strauss-Kahn, IMF head

The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, urged the EU to take co-ordinated action, saying the financial crisis was presenting Europe with a “trial by fire”.

He held talks with Mr Sarkozy before the EU leaders’ meeting and said that although the EU was a more complex organisation than the US, Europe needed to take “concerted collective action”.

He said: “It has to be indicated to the markets… that European countries will not react as every man for himself.”

He also said he would be scaling back his world economic growth forecasts.

European Central Bank chief Jean-Claude Trichet and the chairman of the eurozone group of finance ministers, Jean-Claude Juncker, are also attending the four-hour meeting.

The BBC’s Alasdair Sandford, in Paris, says one source is quoted as saying there may be a call for greater co-ordination of deposit guarantee schemes.

But he adds that after the recent divisions, it is far from clear what will emerge.

Germany and UK sceptical

Germany has made its opposition to any co-ordinated European bail-out plan known ahead of the meeting.

Mr Brown is also sceptical of the need for any Europe-wide plan.

But before leaving for the meeting, Mr Brown said a fund created by the European Investment Bank to be spread over two years to provide loans for small businesses should be made available immediately.

The fund should be released earlier than planned “so that small businesses in our country and the rest of Europe can get money immediately so that they can continue to employ staff and continue to provide services”, Mr Brown said.

The president of the European Parliament has criticised the summit, warning that the leaders of Europe’s four largest economies have no power to decide for the entire European Union.

Calls for European action follow the bail-out of both Bradford and Bingley in the UK and Fortis Bank by the governments of Belgium, Luxembourg and the Netherlands.

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: