Empty euro talk

Angela Merkel and Nicolas Sarkozy have done nothing to ease the sovereign debt crisis.

Yesterday’s underwhelming market reaction to the summit between Angela Merkel and Nicolas Sarkozy was entirely warranted. Showing a lethal combination of arrogance and timidity, the leaders of the two biggest economies in the eurozone sought to speak for all 17 members, as if the views of the others counted for nought. But having arrogated to themselves this plenipotentiary role, they proceeded to do nothing of substance to ease the sovereign debt crisis that threatens the single currency.

The two leaders could have agreed to increase the bail-out fund for member states from the wholly inadequate £400 billion currently in place – but they did not. They could have initiated a move towards debt-sharing through the issuing of “eurobonds” – but they did not. Such a move could be “imagined one day”, the French president conceded, but not just now.

The eurozone’s citizens, who have watched the system teeter on the brink for months, might have expected a greater sense of urgency. Not a bit of it. Instead, the leaders endorsed a proposal to hold two summits a year under the chairmanship of Herman Van Rompuy, the president of the European Council. More talking shops are not the answer to a clear and present danger. Nor is the other plan approved by the pair: that all members enforce balanced budgets via constitutional amendments. Given the way in which their stability and growth pact has been breached over the years, such a move looks laughably naive.

Not content with this posturing, Mrs Merkel and Mr Sarkozy then came up with an idea that was positively dangerous: a new tax on financial transactions that threatens to harm banks that are already alarmingly over-extended. There are issues of vast importance that the eurozone’s leaders must address – but this was one summit it could happily have done without.