Germany and France are pushing for closer economic ties among euro nations and tougher enforcement of budget rules to counter the debt crisis, snubbing investor pleas to back an expanded European Central Bank role.
German Chancellor Angela Merkel, who will use a speech to lawmakers in Berlin today to outline her stance before a Dec. 9 European Union summit, has repeated her push to rework EU rules to lock in budget monitoring and seal off the ECB from political pressure. French President Nicolas Sarkozy late yesterday called for "more discipline" and automatic penalties for nations that break fiscal rules, says Bloomberg.
IMF spokesman Gerry Rice told reporters on Thursday that the fund is likely to downgrade its economic growth forecast in January due to a lack of resolution on euro zone debt and volatility in global financial markets. Rice did not specify which countries or regions would be downgraded. IMF chief Christine Lagarde met with Brazilian Finance Minister Guido Mantega on Thursday who told reporters that BRIC nations would be willing to help troubled euro zone economies in exchange for more influence within the International Monetary Fund and on the condition that Europe makes efforts to resolve its debt crisis. Mantega said "it was a big satisfaction" that the IMF had come to Brazil not to lend money but to ask for loans to assist indebted "developed nations", accoding to CNBC.com.
Sarkozy called for a new treaty incorporating tougher budget discipline, a European Monetary Fund to support countries in difficulty and decisions in the euro area taken by majority vote instead of unanimity. Financial spreadbetters predicted Britain's FTSE 100 would open 28-31 points higher, or as much as 0.6 percent, Germany's DAX would gain 27-29 points, or as much as 0.5 percent, and France's CAC-40 would rise 13-19 points, or as much as 0.6 percent. Investors awaited the U.S. employment report for November, due at 1330 GMT. Economists forecast 122,000 jobs were created in November, compared with 80,000 in October. The unemployment rate is seen at 9.0 percent, unchanged from October, reports Reuters.
Mr Sarkozy and German Chancellor Angela Merkel are due to meet on Monday to propose measures to "guarantee the future of Europe", Mr Sarkozy said. Downing Street said it was waiting to see the options paper for reform which European Council president Herman van Rompuy is drawing up for next week's gathering of EU heads. Mr Cameron's official spokesman said: "Primarily what is being looked at here is rules for the eurozone. "As with any negotiation in Europe we have to wait and see what is being proposed and see how we will respond.
"We will always look to further our national interest.", informs BBC News.
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