German, French leaders meet to discuss fiscal coordination

January 9, 2012 - 11:52 AMT

PanARMENIAN.Net - The German and French leaders meet on Monday, Jan 9, to discuss ways to boost growth in euro zone states struggling to overcome the sovereign debt crisis and rising unemployment, and finalize a deal to increase fiscal coordination within the currency union.

Reuters reports that they may also discuss a financial transaction tax, the "Tobin tax," being promoted by France but resisted by Britain unless adopted on a global scale, which could split the European Union at a summit at the end of the month.

Chancellor Angela Merkel and President Nicolas Sarkozy, aiming to align the two powerhouse partners that have driven European integration, will also focus on how to boost employment in the current era of austerity.

While Germany's labor market is thriving, employment is a pressing issue for Sarkozy, who faces an election in less than four months and is trailing in polls while French jobless claims are at their highest level in 12 years.

He may also try to accelerate plans for a tax on financial transactions, which he has set out as a priority ahead of the election, and which on Friday he vowed to implement in France even if EU partners like Germany are not on board.

Paris and Berlin want a "Tobin tax" to be applied across the EU, but Britain is resisting, fearing it will damage London, a global financial centre and mainstay of the British economy where much of the tax would be raised.

On Sunday, British Prime Minister David Cameron said he would veto a European-wide financial transaction tax unless it was imposed globally, deepening the confrontation over the matter with both France and Germany.

German officials expect the EU summit to show satisfying results on stronger budgetary rules they have urged for countries using the euro.

The updated version of the EU's 'fiscal compact', which gives Brussels the right to take states to court if they violate the stricter rules, is nearing approval, relieving pressure on Merkel to take new initiatives at the summit.