France and Italy call on EU to bring down borrowing costs
The French President, François Hollande, and the Italian Prime Minister, Mario Monti, have urged the European Union to help bring down the borrowing costs for countries struggling to cope with the Eurozone debt crisis.
The pair met in Rome on Tuesday, two days before a key European Central Bank meeting that may lead to a new round of sovereign bond purchases to ease borrowing costs.
“The interest rates in several countries affected by the crisis are too high,” Hollande says.
The difference in borrowing costs, known as a spread, between Italy and Spain and those of financially-stable Germany widened to record levels earlier this year as investors decided to lower their risk.
“As [countries] get economic policies underway, the EU must acknowledge it in order to put a stop to the serious obstacles of spreads that have no reference to the economy’s health,” Mario Monti says.
Hollande reiterated his hope that clear decisions on Greece and Spain, two of the most vulnerable countries in the Eurozone, will be taken at a European Council summit in October.
“If we want to re-establish trust, we must not have any doubts about the Eurozone,” he says.
Hollande and Monti also called for more frequent meetings between European leaders.
As the pair met, the credit agency Moody’s changed its outlook for the Eurozone from “stable” to “negative”, highlighting the weaker outlook for France and regional-powerhouse Germany.
It also says it would not rule out downgrading the Eurozone’s triple-A credit rating.