Sarkozy blocked by EU allies
France faced a backlash from key EU allies in their drive to establish a European competitiveness pact
GERMANY and France faced a backlash from some of their key EU allies in their drive to establish a European competitiveness pact in return for measures to reinforce the euro-zone bailout fund.
At an EU summit in Brussels, President Sarkozy and German chancellor Angela Merkel proposed limits on business taxes, national debt and pension ages and a scrapping of
index-linked pay rises.
Britain, Belgium, Sweden, the Netherlands and Austria were joined by Poland and Romania in expressing opposition.
Belgium’s caretaker prime minister, Yves Leterme, said he was against any plan that included doing away with index-linked wage increases.
"There must be more economic co-operation, but member states must be left the room to carry out their own policies. Each member state has its own accents, its own traditions," he said.
The Franco-German initiative would see a new inter-governmental body policing fiscal discipline and economic policy harmonisation throughout the euro-zone.
President Sarkozy said Germany and France were working "hand in glove" to defend the single currency. "We want to ensure the convergence of different European economies ... We therefore agree on a structural plan that is designed to respond to the challenges that Europe faces," he said.
