European Chiefs Set Growth Pact

Merkel resists push for debt plan; growth plan to total about 1% of region’s output.

German Chancellor Angela Merkel parried attempts to get her to accept more flexible use of the euro-region’s rescue funds and collectively financing debt, while agreeing with leaders of Italy, Spain and France on a proposal to spur economic growth.

In a meeting in Rome, Merkel, Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy said they would lobby their European Union partners to accept a growth plan worth as much as 130 billion euros ($162 billion), or about 1 percent of the euro-region’s economic output. They didn’t give specifics about the plan or how it would be financed.

Monti Proposals

Prior to the meeting, Monti had put forth his own proposal for a banking union, including a European supervisor and a deposit guarantee fund. He also pressed for nations to give up some autonomy over their budgets. He called for a mechanism to help bring down surging borrowing costs for nations that are meeting their fiscal goal. Monti also favors euro-area countries collectively selling debt.

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