German Chancellor Angela Merkel said yesterday that European nations were on the verge of creating a “fiscal union” with rigorous budgetary oversight to battle the eurozone debt crisis.
“We are not only talking about a fiscal union, we are beginning to create it,” she said in a keenly awaited speech to the German parliament, adding it would be a “fiscal union with strict rules, at least for the eurozone.”
Merkel said the past few grueling months, with market turmoil, the threat of Greek default on its debts and political strife in the EU, had focused people’s minds.
“Anyone who had said a few months ago that we, at the end of 2011, would be taking very serious and concrete steps toward a European stability union, a European fiscal union, toward introducing [budgetary] intervention in Europe, would have been considered crazy,” she said.
“Now these items are on the agenda, we are on the verge of it, there are still difficulties to be surmounted, but their necessity is now widely recognized,” she said.
Merkel was laying out what she said were the goals of Germany, the EU’s top economy, ahead of a crunch summit in Brussels next week.
She is scheduled to hold talks with French President Nicolas Sarkozy on Monday to hammer out a common position ahead of the gathering.
Merkel said the “fiscal union” should lead to a new “European debt brake” to stop countries from spending their way to the brink of insolvency.
“We must strengthen the foundations of the economic and currency union,” she said.
Merkel said there was “no alternative to treaty change” which would codify budgetary discipline in the eurozone.
“Rules must be respected. Respect for them must be supervised. Their violation must have consequences,” she said.