ROME – The leaders of Italy, Germany, Spain and France have agreed to push for a growth package worth up to $163 billion at a European Union summit next week that’s intended to kick-start the economy and safeguard the currency bloc.
From left, Italian Premier Mario Monti, German Chancellor Angela Merkel, Spanish Prime Minister Mariano Rajoy and President Francois Hollande of France provided few details Friday beyond agreement on pursuing a financial transaction tax – something Germany has championed.
Economists said the size of the growth package would be modest, about 1 percent of the euro alliance’s gross domestic product. But they said it marked a recognition by Merkel that more government spending would be needed.
“It is at least a step in the right direction,” said Ted Truman, a former international economics adviser at the Federal Reserve and at the Treasury Department in the Obama administration. “The tone has changed, in part because the German economy has not been doing as well recently.”
Merkel has come under rising pressure to give ground on key pro-growth measures.
“We say that growth and solid financials are two sides of a coin,” she said. “Solid financials are not sufficient.”
Monti is trying to bridge Merkel’s insistence on fiscal discipline and the focus on growth by recently elected Hollande. He acknowledged that steps taken so far have not been sufficient, and that markets and European Union citizens alike need to view the euro currency as “irreversible.”The Associated Press