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Hanging over European Union governments, and business and finance,is the possibility of Greece leaving the eurozone. An informal summit of European Union leaders overnight resulted inlittle apart from attempts to talk around deep differences betweenFrance and Germany on diluting economic reforms in debt-riddenmembers with growth stimulus. The May survey of eurozone business confidence showed the worstmonthly fall for nearly three years. The data for Germany was theworst for six months and an industrial index for France the worstfor 37 months. At Capital Economics in London, senior European economist JenniferMcKeown commented: "Spreading economic downturn will further reducethe currency union's chances of survival." The euro slumped to a 22-month dollar low point of $1.2516, lastreached in July 2010. It later stood at $1.2544. Stocks fluctuated and then rallied slightly. London's benchmarkFTSE 100 stock index climbed 0.59 percent. Frankfurt's DAX 30 added0.13 percent and the Paris CAC 40 won 0.38 percent. "Nothing in the data released this morning suggests that economicconditions in the UK and Europe are easing against a backdrop ofpolicy paralysis across Europe," CMC Markets analyst Michael Hewsontold AFP. "Unless policymakers come up with radical new solutions withrespect to the crisis they will soon be faced with the prospect ofdelivering closer fiscal integration or overseeing the breakup ofthe euro." If Greeks vote in new elections on June 17 against the budget cutsand reforms tied to a second debt rescue, the EU, InternationalMonetary Fund and European Central Bank are expected to curtaildrastically financial lifelines for Greece. This would push Greece from the eurozone and could causeincalculable risks for other weaker members, notably Spain. Under all these clouds, funds flowed into safe-haven German 10-yeardebt bonds, pushing the fixed rate of return down to a record lowlevel of 1.358 percent. The French 10-year bond yield also fell toclose to record levels, to 2.575 percent. EU President Herman Van Rompuy told journalists after the summit:"We want Greece to remain in the euro area while respecting itscommitments." But one diplomat told AFP that officials from the other 16 eurozonecountries had been told this week to "reflect" on what thedeparture of Greece would mean. The main point of contention at the summit, the creation ofeurobonds for joint borrowing by strong and weak countriestogether, was discussed under a new focus on generating growth. This push was headed by new French President Francois Hollande, butGerman Chancellor Angela Merkel held firm to her line thatstructural reforms to improve competitiveness in countries withdebt problems must come before eurobonds. Various other issues and ideas were discussed: EU project bonds forinfrastructure projects, more resources for the European InvestmentBank, use of existing EU project funds and the use of new eurozonerescue funding to support banks, with help from the EuropeanCentral Bank, and a bank deposit insurance scheme. Britain insisted that it would fight resolutely against a proposedfinancial services tax, intended to fund future problems in thebanking sector, which it sees as a largely France-inspired threatto the City of London. Hollande, a Socialist who displaced Nicolas Sarkozy in a Frenchpresidential election earlier this month, said: "We have to actstraight away for growth." Merkel, who insists on structural reforms first despite waves ofprotests against austerity across the EU, said that eurobonds werenot a route to growth and were not permitted under EU treaties. Merkel, backed by the Netherlands, Finland and Sweden, said therehad been "balanced" discussion on eurobonds and that severalparticipants had expressed reservations. A complicating factor is that Hollande's Socialists are campaigningin elections for a new majority in the French national assembly(parliament) and Merkel, weakened by the debt crisis, faceselections next year. At Berenberg bank, analyst Christian Schulz said that Germany andits allies had rejected eurobonds as an "immediate fix", andcommented that such bonds would remove incentives for reforms inweaker countries. The EU summit on June 28-29 was likely to result in a "very modest"growth initiative, and there had been no progress on controllingcontagion from the crisis, the analyst observed. In Germany, press comment said that Hollande had taken theinitiative with his proposals. The mass circulation Bild newspapersaid that Merkel and Hollande had argued over eurobonds. "Neverwere EU member states -- especially the euro-drivers Germany andFrance -- so far apart in their demands as today," Bild said. I am an expert from chemical-storagecabinet.com, while we provides the quality product, such as Flammable Storage Cabinet , China Electronic Dry Cabinet, Chemical Fume Hood,and more.
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