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Europe

France, Italy see “light at the end of the tunnel” for eurozone crisis

Text by News Wires

Latest update : 2012-08-01

Italian Prime Minister Mario Monti and French President François Hollande hailed progress in the eurozone crisis after talks in Paris on Tuesday, adding that both countries "are determined to do everything to protect" the euro.

AFP - France and Italy sought on Tuesday to boost confidence that Europe can tackle its debt crisis, with Italian Prime Minister Mario Monti saying he sees "light at the end of the tunnel" for the eurozone.

With European leaders keen to maintain momentum following a series of well received statements, Monti and French President Francois Hollande hailed progress in addressing the eurozone's debt woes after talks in Paris.

But new data provided a stark reminder of the devastating effects of the crisis, with the European Union saying unemployment across the eurozone hit a record 11.2 percent in June.

France and Italy "are determined to do everything to protect" the euro, Hollande and Monti said in a joint statement, praising recent remarks by European Central Bank chief Mario Draghi suggesting ECB intervention.

"Member states, like European institutions...must meet their obligations in order to maintain the stability and proper functioning of the eurozone," they said, calling for the rapid implementation of eurozone reforms.

Speaking to journalists, Hollande said the eurozone must be "defended, preserved and consolidated" and hailed "very significant progress in recent weeks."

Ahead of the talks Monti expressed confidence the eurozone was finally preparing to take the necessary steps.

"We and the rest of Europe are getting closer to the end of the tunnel. There's light at the end of the tunnel," Monti said in an interview with Rai Radio.

Monti said he could sense "greater willingness on the part of European institutions and governments" to implement reforms agreed at an EU summit in June and to take action to help debt-ridden countries.

After Paris, Monti will travel to Helsinki and Madrid as part of a tour he said would help "secure the euro and give a decisive boost to European growth."

Hopes for a concerted effort to address the two-and-a-half-year debt crisis were raised last week when Draghi vowed to do "whatever it takes" to preserve the euro.

EUROZONE CRISIS

The markets are now waiting for direct intervention to help bring down dangerously high borrowing costs for Italy and Spain and so prevent them needing what would be hugely costly bailouts.

Such hopes were bolstered by a verbal offensive from top European policymakers, including Eurogroup chief Jean-Claude Juncker who said the eurozone had reached a "crucial point" and vowed action with the ECB.

In telephone calls with Monti and Hollande, German Chancellor Angela Merkel also agreed to do "everything possible" to save the euro.

The statements had an immediate effect, with stock markets soaring, Spain's 10-year borrowing costs falling on the bond markets and Italy selling benchmark 10-year bonds on Monday at 5.96 percent -- below the key 6.0-percent danger threshold.

In the United States, President Barack Obama also urged Europe to take action.

"I don't think ultimately that the Europeans will let the euro unravel. But they're going to have to take some decisive steps," Obama said.

As well as record European unemployment, both economic powerhouse Germany and struggling Italy reported rises in joblessness in Tuesday.

German unemployment rose to 6.8 percent in July from 6.6 percent in June while Italy's jobless total hit a record 10.8 percent in June, up from 10.6 percent in May, with youth unemployment at 34.3 percent.

Asian stock markets were generally higher on Tuesday meanwhile, their third consecutive positive session, as traders looked for new stimulus measures from both the European and US central banks, while European stocks mostly declined.

 

Date created : 2012-07-31

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