Merkel calls for EU powers to veto national budgets –

German chancellor Angela Merkel has demanded stronger central powers for the European Commission to veto national budgets that breach EU rules, risking a clash with France at a summit of EU leaders today.

Addressing parliament in Berlin hours before the 22nd summit since the start of the euro zone‘s debt crisis, Dr Merkel also sought to slow the race to create a single European banking supervisor, saying quality was more important than speed.

French president François Hollande took a very different tack in an interview with six European newspapers, warning that budget discipline alone would not solve the euro zone’s problems without doing more to revive growth. He called for greater haste in implementing a banking union.

“The topic of this summit is not the fiscal union but the banking union, so the only decision that will be taken is to set up a banking union by the end of the year and especially the banking supervision. The other topic is not on the agenda,” he said at pre-summit meeting of socialist leaders.

Dr Merkel and Mr Hollande are expected to hold a one-on-one meeting before the summit proper begins, EU officials said, which may provide a chance to discuss their differences.

Dr Merkel skirted the issue of a possible credit line for Spain, which euro zone officials expect Madrid to request within weeks, but reiterated her desire to keep Greece in the currency area despite its chronic debt problems.

In Greece, workers walked off the job for the second time in three weeks, aiming to show EU leaders that a new wave of wage and pension cuts will only worsen their plight after five years of recession.

“We have made good progress on strengthening fiscal discipline with the fiscal pact but we are of the opinion, and I speak for the whole German government on this, that we could go a step further by giving Europe real rights of intervention in national budgets,” Dr Merkel told the Bundestag lower house.

A proposal by German finance minister Wolfgang Schaeuble to create a super-empowered European currency commissioner was a possible way forward, she said, and more European control should be accompanied by a stronger European Parliament.

via Merkel calls for EU powers to veto national budgets – The Irish Times – Thu, Oct 18, 2012.