EU leaders gather for summit as more strikes hit Greece

18^th October 2012

Max Marioni

Max Marioni

18 October 2012

The heads of government of 27 EU member-states are meeting today in Brussels for a two-day summit. The summit is expected to focus on joint banking supervision, with the aim of setting up a banking union in the eurozone.

In the run-up to the summit, EU leaders were divided on the direction the EU should take. German Chancellor Angela Merkel is requesting greater rights for the EU to intervene in national budgets, with the creation of a new “currency commissioner” with sweeping powers to ensure strict budgetary controls are in place.

However, French President François Hollande is expected to challenge Ms Merkel over austerity policies and resist German requests for fiscal controls. Mr Hollande, in an interview for several European newspapers published today, has accused Ms Merkel of being too preoccupied with German internal policies, and not as interested in the “common European good”.

Britain and the other nine EU member-states that are not part of the eurozone are reportedly concerned about their status and their voting rights in the future banking union. Many commentators have indicated that Britain is drifting further away from the EU over banking supervision issues and the management of the euro crisis.

Meanwhile, a general strike is underway in Greece in protest at continued austerity policies demanded by the EU and IMF as a condition for financial assistance.  The demonstration, scheduled to reach its climax in Syntagma square in Athens, is the 20^th general strike since 2010.

This morning Ms Merkel addressed the German parliament and commented that she wanted Greece to remain in the Euro, although Greece, according to some analysts, might be better off leaving the eurozone altogether.

European leaders are under somewhat less pressure from the markets than at previous summits, as yields on Spanish and Italian bonds have dropped in the last few days following Moody’s decision not to downgrade Spain’s credit rating.

Max Marioni