David Blackburn

Common Franco-German position on Greek debt

As I wrote earlier this morning, rumours of a ‘common Franco-German position’ on Greek debt were circulating in the early hours. Details are now emerging.

Nicolas Sarkozy has dropped plans to impose a 0.0025 per cent levy on Eurozone bank assets, which was opposed by Angela Merkel for being much too cumbersome. In return, it seems that Merkel is prepared to consider the French-led plan of bond rollover. Merkel is also keen that private sector holders of Greek bonds pay their share of this second bailout. According to the FT, she favours a bond-swap deal, whereby bonds that will mature in the next eight years are swapped for new 30 year bonds paying a lower rate of interest.

Franco-German co-operation is obviously an important milestone on the road to securing wider agreement. But criticisms remain: these are piecemeal measures, rather than a moment of grand coherence.

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