German, French and UK Leaders Continue to Disagree Over the Future of Europe

By mosesbet · Filed Under Market News, News Comments Off on German, French and UK Leaders Continue to Disagree Over the Future of Europe 

The markets have continued in their venerable state as leaders of the UK, France and Germany continue to disagree over their plan to fix the Eurozone debt crisis.

The FTSE 100 dropped this morning down to 5,465.15, which represents a 58-point drop since yesterday.  The FTSE 250 has similarly fallen 0.8% to 10,064 amid news of the failed crisis talks between Angela Merkel and UK Prime Minister David Cameron.

The different visions between the two countries over the future of the Eurozone is the main stalling point, however tensions between France and the UK, the French and Germans, and between the UK and Germany are rising due to their nationalist sentiments.

Yesterday, the French newspaper “Le Monde” urged Britain to “Shut Up”, after criticism about how European leaders are handling the debt crisis.  Germany MPs, such as the leader of the Christian Democrats, Michael Meister, has advocated against Britain’s nationalistic ties to the Pound.  He said that he was “baffled” at the British public’s uneducated view of how a trailing Euro would have drastic consequences for London.

While British Prime Minister David Cameron has tried his best to prevent any additional taxes between the UK and the Eurozone from hurting London’s financial trading centre, German MPs are arguing that the UK should never have become so reliant on the financial industry (which boomed in 1986 under deregulation from Margeret Thatcher) and allowed it’s manufacturing sector to dwindle as much as it has done.

The different views between Germany, France and the UK however are the biggest cause for concern.  There is never going to be a leading consensus on the best way to handle the Eurozone crisis until the major economic leaders (Merkel, Sarkozy and Cameron) an agree on a solution.

The British and the French want the European Central Bank (ECB) to act as a lender of last resort (a sort of guarantee of funds and toxic debt), while Angela Merkel is completely against that.  Her closest advisors have told her that a larger take-up of European Bonds is against a range of European treaties, is likely to lead to printing of more money and inflation plus it puts less pressure on Greece and Italy to reform themselves.

The Germans and British also disagree over the extent to which Europe should be integrated.  German Chancellor Angela Merkel believes in a wholly integrated European Union, while David Cameron wants a diversified Europe with different levels of integration (many in the Eurozone fear this will lead to a two-tier Europe, giving countries on the outer rings the same amount of power at the table but with less commitments).

 

Be Sociable, Share!