Merkel and Sarkozy move closer to eurozone government

City A.M. Reporter
France and Germany's leaders have agreed to push for closer joint governance of economic policy and float proposals in September for a tax on financial transactions, French president Nicolas Sarkozy has said.

After talks in Paris, Sarkozy said he and German chancellor Angela Merkel were also proposing that all 17 eurozone countries commit to balanced finances and write that goal into their constitutional law by summer 2012.

Among other measures announced, he said they would also seek to ensure better cross-border economic government for the euro zone via twice-yearly meetings of leaders and the creation of a two-and-a-half-year presidency to steer this forum.

"We asked our ministers of finance and the economy to prepare proposals which will be put to us at the beginning of 2012 so that from the beginning of 2013... we could have a common tax on companies in terms of the tax base as well as in its rate for German companies and French companies," Sarkozy told a news conference at his Elysee Palace offices, where he was flanked by Merkel.

"At the start of each European semester the economy ministers of France and Germany will exchange information so that the economic scenarios in the framework of the presentation of our respective budgets are the same."

Merkel added: "Germany and France feel absolutely obliged to strengthen the euro as our common currency and further develop it. And it is entirely clear that for this to happen, we need a stronger interplay of financial and economic policy in the eurozone."

The two are under pressure to come up with plans to shore up the euro zone and restore financial market confidence after a year and a half of turmoil that has refused to die down despite bailouts of Greece, Ireland and Portugal and the creation of an anti-contagion fund.