The leaders of France and Germany urge flexibility for European stability pact

Other News Materials 26 November 2008 13:54 (UTC +04:00)

The leaders of France and Germany called Wednesday for a relaxation of the European Union's stability and growth pact in order to cushion the effects of the global financial crisis.

Some countries might be forced to exceed the pact's tough fiscal rules which limit new borrowing to 3 per cent of GDP, Chancellor Angela Merkel and President Nicholas Sarkozy said, reported dpa.

In a joint newspaper column for Germany' Frankfurter Allgemeine Zeitung and the French daily Le Figaro, they said disputes over deficit criteria needed to be avoided in such "exceptional times."

"We are experiencing the worst financial crisis in the last 70 years. It is possible the economic situation in many European countries will be the worst for a long time. They will show negative growth in the near future," the two leaders said.

Sarkozy and Merkel said they expected the global economy crisis to stabilize during the course of 2009 and then grow stronger, warning however that the situation remained unpredictable.

Despite massive support for the banking sector in all out countries, financial markets remain in a precarious situation, they said.

The two leaders called on banks and financial institutions "to take advantage of support measures offered to them and ensure that enough credit is available to keep the economy ticking over."