Nicolas Sarkozy: Each government will act in a co-ordinated manner
Europe’s biggest economies have agreed to work together to support financial institutions – but without forming a joint bail-out fund.
French President Nicolas Sarkozy hosted the meeting of the leaders of Britain, Germany and Italy in Paris.
They agreed to seek a relaxation of the EU rules governing the amount of money individual states could borrow.
Mr Sarkozy announced a series of other measures – including unspecified action against the executives of failed banks.
Speaking after the meeting at a joint news conference, he said the four had agreed that the leaders of a financial institution that had to be rescued should be “sanctioned”.
Mr Sarkozy added: “Each government will operate with its own methods and means, but in a co-ordinated manner.”
Gordon Brown: We’re doing everything that we can
Leaders were reminded of just how serious the crisis is as talks to rescue Germany’s second largest mortgage lender collapsed.
Hypo Real Estate said the 35bn euro (£27.8bn, $51.21bn) deal had fallen apart after the banking consortium involved pulled out. The lender said it would seek to stay in business through “alternative measures”.
Meanwhile, Mr Sarkozy suggested EU budget rules – requiring eurozone states to keep their budget deficits below 3% and overall public debt below 60% of gross domestic product – would be adapted to deal with the current “exceptional circumstances”.
European Commission President Jose Manuel Barroso agreed that the budget rules would be applied with “flexibility”.
European Central Bank chief Jean-Claude Trichet and the chairman of the eurozone group of finance ministers, Jean-Claude Juncker also attended the summit.
The leaders issued a joint call for a G8 summit “as soon as possible” to review the rules governing financial markets.
UK Prime Minister Gordon Brown said governments would continue to take measures to ease the credit shortage.
“The message to families and to businesses is that, as our central banks are already doing, liquidity will be assured in order to preserve confidence and stability,” he told reporters after the mini-summit.
‘Trial by fire’
The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, had earlier urged the EU to take co-ordinated action, saying the financial crisis was presenting Europe with a “trial by fire”.