GERMANY IS keeping up pressure on EU partners over the new fiscal treaty text, saying it remains “open” whether Berlin will push for signatory countries to agree a constitutional debt limit.
Chancellor Angela Merkel will discuss the issue with senior EU and IMF officials today and tomorrow, amid signs that Berlin is ready to drop an EU financial transaction tax in favour of a British-style stamp duty on share sales. Dr Merkel’s spokesman said yesterday that Berlin was not yet satisfied with the latest treaty draft. “Of course not all questions have been answered finally,” said Steffen Seibert. “But the government is confident that this will succeed by the end of January and that we will have, at the end, the ambitious result desired.”
Christine Lagarde, head of the International Monetary Fund, will meet the German leader tomorrow evening, before delivering a keynote address in Berlin on Monday.
That evening, Dr Merkel will receive European Union president Herman Van Rompuy and European Commission president José Manuel Barroso.
The IMF’s call for a capital boost from members puts the squeeze on Germany as it readies a €22 billion up-front capital pay-in to the permanent bailout mechanism. German officials refuse to be drawn on the consequences of the IMF and EU demands for its own constitutional debt brake – and whether now is the right time to insist other countries adopt such a measure.
Germany foreign minister Guido Westerwelle urged the euro zone to go beyond “tighter rules and better co-ordination” for financing their budgets and embrace a “paradigm change”. The debt-driven economy had “reached its limits” and pushed the euro zone “beyond the point of credibility”.
“Fiscal responsibility and sustainability are not arcane concepts for experts. Nor are they awkward hobbies of Germans still traumatised by memories of hyper-inflation three generations ago,” he said in Washington. “They are the imperative of our time.”
Meanwhile, Germany is prepared to accept a British-style stamp duty on share trades instead of a full financial transaction tax in a bid to overcome divisions within the EU.
Though still officially backing a European Commission proposal for all EU members to adopt the tax, finance ministry officials have spoken out in favour of a levy similar to the British stamp duty of 0.5 per cent on share trades. Dr Merkel’s Free Democrat coalition partners, opposed to a tax unless all EU members come on board, have pushed the agenda into the open ahead of Monday’s meeting of EU finance ministers.
“If the British cannot move towards the European model of a financial transaction tax, then it would appear sensible to discuss the British model with Britain and other European countries,” said FDP leader Philip Rösler.
His proposals has been described as “smart and sensible” by the chancellor’s spokesman.
The finance ministry is also well-disposed to the idea and wants agreement on some kind of levy before April.
“Despite warnings on a transaction tax, the City of London has coped all these years with the stamp duty on share transactions,” said a senior government source.