European leaders are “very close” to ending the debt crisis, the French president has claimed, as borrowing costs for Spain and Italy dropped ahead of today’s European Union summit.
Francois Hollande said that leaders at the June summit had made the “right decisions”, including planning a banking union, but he said it was now their “duty to apply them rapidly”. He added: “The worst – in the sense of the fear the eurozone would break up – is over. But the best is not here yet. It’s up to us to build it.”
He signalled his intention to challenge Angela Merkel’s tough austerity policies at the summit, arguing that it was “false” to claim that Germany was the eurozone’s only paymaster. “We are all taking part in this solidarity, not only the Germans,” he said. “Let’s stop thinking that there is only one country that is going to pay for all the others. That’s false.”
He added: “The countries that are in surplus should stimulate domestic demand with wage increases and lower taxes,” Mr Hollande said. “That would be the best expression of solidarity.”
Mr Hollande also risking Mrs Merkel’s anger by backing Spain’s demand to know the penalties of a bail-out. “Spain needs to know the precise conditions under which it would receive financial help,” he said.
The yield on Spain’s benchmark 10-year bonds dropped to their lowest level since April after Moody’s Investors Service confirmed the country’s credit rating. Moody’s said the backstop of the European Central Bank’s planned bond-buying programme had protected the rating.