European Debt Crisis

Euro leaders could up pressure on Germany

Stephen Beard Nov 24, 2011

Jeremy Hobson: It’s a meeting of Europe’s three biggest economies today in Strasbourg, France — that would be the leaders of Italy, France and Germany. And after yesterday’s disastrous bond sale in Germany, this meeting will be a little different.

Marketplace’s Stephen Beard reports.

Stephen Beard: Yesterday, the German government failed to sell all the bonds it wanted to sell. Many traders said this was a sign that the fears about debt have now reached the eurozone’s strongest economy.

Simon Tilford is with the Centre for European Reform. He says we could now see the French and Italian leaders ganging up on Germany’s Angela Merkel at today’s meeting.

Simon Tilford: I certainly think that Sarkozy and Mario Monti will feel embolded by the fact that the crisis has spread to the core, and they will seek to steer the discussion away from this obsessive focus with fiscal austerity as a solution to the crisis.

He says the French and the Italians will now step up the pressure on the Germans into accepting a new, expanded role for the European Central Bank. They want the bank to act more like the Federal Reserve — to print money, and to buy vast quantities of goveernment debt. The Germans oppose this move because they fear it could lead to much higher inflation.

In London, I’m Stephen Beard for Marketplace.

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