Germany and France agree on basic set of fiscal rules ahead of EU summit

German chancellor Angela Merkel and French president Nicholas Sarkozy on Monday agreed on a set of fiscal rules that should restore some of the lost confidence in the euro zone economies. The package of measures, aiming at saving the single European currency, includes a commitment not to force bond owners in the private sector to take losses on any potential bailout. Merkel, who met Sarkozy in Paris on Monday, has also asked for a revision of the full EU governing treaty.

“France and Germany, in full solidarity, confirm their determination to take all the necessary measures, in liaison with their partners and the European institutions to ensure the stability of the euro area,” read a joint statement from France and Germany. The measures agreed by the two will be further debated in the EU summit on Friday in Brussels and further agreement will be sought from all 27 EU member countries by March next year. Agreement from the 17 eurozone members could also be enough to enforce the rules. The announcements came at a time when financial markets were already facing pressure, as Standard & Poor's had announced plans to put all 17 eurozone countries on review for a downgrade. Watch the recording of the joint press conference here. Angela Merkel's recent speech in the German Bundestag highlighted some of the fiscal issues. "Any split in the EU must be avoided. Non-euro-zone states should also be able to join. There can be no question of Germany wanting to dominate Europe," read her speech. "German and European unification are two sides of the same coin," said Angela Merkel. editor@romania-insider.com (photo source: French Presidency)