Eurozone Leaders Agree on New Stimulus Package

(Image Source: Bloomberg) BY JOHN O’CONNOR ANCHOR NEVILLE MILLER Leaders from the Eurozone’s four biggest economies make a major move a week before the Brussels summit. The BBC has the details. “The leaders of Germany, France, Italy and Spain have agreed on a package to stimulate economic growth across the eurozone. In a meeting in Rome, ahead of a major summit next week, they agreed that up to 130 billion euros should be set aside.” That sum amounts to around 1 percent of the European Union’s total GDP. Italian Prime Minister Mario Monti says the move will relaunch growth through investment. The Guardian explains. “EU governments have already agreed to boost the capital of the European Investment Bank by €10bn, hoping it will be leveraged into €60bn in the financial markets for investment purposes. The growth package also appears to entail deploying up to €55bn in unspent EU structural funds.” Germany’s agreement to this new plan is seen as an attempt to show it’s not always opposed to growth strategies. Germany wants to be clear that it will invest in stimulus plans as long as fiscal discipline is also enforced. The Wall Street Journal reports. “Europe's southern states have been pushing for a concerted investment plan to offset the austerity moves that were taken to fight the debt crisis but that are biting into their economies... [But] Chancellor Merkel made clear that any new stimulus measures can't replace budget discipline... Growth and fiscal discipline are two sides of the same coin.” According to the New York Times, however, Merkel has softened her austerity stance since the situations became critical. “She could credibly argue to domestic voters that drastic action was necessary to save the single currency. Such a moment appears to be looming in the build-up to the Brussels summit at the end of next week at which the architecture of the euro is due to be debated.”