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Germany and France polls apart on eurozone solution

Angela Merkel and Nicolas Sarkozy have yet to agree a way forward

By John Lichfield and Ruby Russell

Angela Merkel insisted yesterday that the euro could only be saved by changes in the EU treaty to impose legally-enforceable budget discipline on all countries using the currency.

Her words, in a landmark speech to the Bundestag implied exactly the kind of federalist solution, overriding national sovereignty, which was rejected the day before by President Nicolas Sarkozy.

Efforts will be made to resolve the apparent gulf between the two leaders when they meet in Paris on Monday to agree draft treaty changes to place before a critical EU summit in Brussels on Thursday and Friday.

After talks with president Sarkozy in Paris yesterday, Prime Minister David Cameron said any remodelled treaty must “enhance and protect British interests”.

How the apparent gulf between Ms Merkel and Mr Sarkozy can be bridged is unclear. Some officials in Paris said yesterday that the differences between them might be more rhetorical than they seemed.

Hopes of a deal at next week's summit have calmed bond and stock markets this week. Fears have been reduced, for the time being, that an imminent meltdown of the euro is about to tip the world into a deep recession. In these circumstances, one official said yesterday Berlin and Paris are “condemned to reach an agreement next week”.

In her speech to the Bundestag, Ms Merkel showed no signs of softening her line to please Mr Sarkozy. She said that the crisis in confidence in the euro could not be solved by “short-term fixes”.

In a speech in Toulon on Thursday night, Mr Sarkozy agreed with Ms Merkel that there should be treaty changes and that penalties on erring members of the eurozone should be “more rapid, more autocratic and more severe”.

He also talked of reducing the national right of veto by widening the scope of majority voting in the Council of Ministers. But he insisted that any changes in the EU treaty must avoid a drive towards a “supranational” federal European state.

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