France, Germany calls for close coordination to boost growth

08:34, July 22, 2010      

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Paris and Berlin called on Wednesday for close financial coordination in eurozone to forge a united action to secure financial stability and promote good governance in the European bloc, French Economy Ministry Cristine Lagarde said in a statement.

Lagarde and Wolfgang Schauble, the German finance minister, pointed fingers on the weakness of the European economy during a French cabinet meeting and outlined a common economic proposals aiming at cutting deficits and create sufficient growth to create jobs in the eurozone.

"Over the past few months Europe has demonstrated unwavering commitment to the stability, unity and integrity in the eurozone," both officials said in a joint statement posted on the ministry website.

"A single currency simply cannot work properly without enhancing economic policy coordination. The coordination and surveillance instruments available to us ... need to be interlinked more effectively," they added.

Europe 2020, the European economic strategy, needs sound foundations to generate growth and jobs, they said.

With the aim, Lagarde and Schauble urged to set a mechanism to effectively monitor EU competitiveness in order to "be able to detect as early as possible any unsustainable developments that could lead to systemic risks and take the steps required to overcome them."

Besides, the two ministers asked for the improvement of fiscal control by imposing rapidly sanctions on member states, which break up the Stability and Growth Pact.

Current pact limits state public debt to 60 percent of each gross domestic product (GDP) and budget deficit to 3 percent of GDP, however, leading eurozone members, namely France, Germany and Italy, all registered figures high above the red line.

France and Germany represent the main growth engines in the bloc, accounting for 49 percent of the European Union's gross domestic product. "Strengthening economic governance has become a crucial necessity. It requires a cohesive, ambitious European economic strategy that fosters vigorous, sustainable, job-creating growth," both ministers said in their report to be presented to Herman van Rompuy, the president of the European Council.

The International Monetary Fund (IMF) sees growth in the European Union at 1 percent this year after falling by 4.1 percent in 2009.

Source: Xinhua


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