Back to the drawing board as Eurobonds look dead in the water

Watch her lips: no Eurobonds. Angela Merkel’s Finance, Minister Wolfgang Schauble has told Der Spiegel:

“I rule out Eurobonds for as long as member states conduct their own financial policies and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity.”

Merkel’s government is making its depositions ahead of tomorrow’s Eurozone summit, rebutting the moves made by other member states over the weekend to introduce Eurobonds, a step towards political integration. Those proposals were backed by Nicolas Sarkozy, with whom Merkel is meeting in private this afternoon. Interestingly, Le Monde reveals that Eurobonds are not even on the agenda of these preliminary talks, such is the intensity of German opposition. Small wonder then that unnamed French officials have told the FT that Eurobonds are not plausible without “a much more determined integration of budgetary policy”. The question now is, what on earth will Merkel et al propose tomorrow? What chance that it will be more of the same?