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France, Spain seek European push for jobs, growth

27 November 2013, 23:52 CET
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(MADRID) - France and Spain's leaders, both suffering in the polls as they grapple with feeble economies, united Wednesday in pressuring the European Union to do more to help boost activity and create desperately needed jobs.

President Francois Hollande flew in for a Madrid summit with France's economy shrinking 0.1 percent in the third quarter and a poll this month showing only 21 percent of the French approve of his policies, the lowest rating since the presidential system began more than 50 years ago.

The Socialist French leader, accompanied by his Prime Minister Jean-Marc Ayrault and eight ministers, found a sympathetic ear from Spain's conservative Prime Minister Mariano Rajoy as he pushed for eurozone reforms ahead of a December 19-20 European Union summit.

"We need to bring back growth and confidence in our countries," the French president, who was booed at a Remembrance Day ceremony in Paris this month, told a joint news conference with Rajoy after their summit talks.

Spain's premier, whose performance earned the disapproval of 75 percent of respondents in a survey published last month, said Paris and Madrid had "a common vision and common interests" in employment and economic growth.

Despite objections in Germany, Hollande and Rajoy issued a joint statement advocating the "urgent" establishment of a eurozone banking system.

The European Stability Mechanism banking authority should be given powers to directly bail out a member country's troubled banks, without asking the host state to foot the bill and thus push up its sovereign debt, they said, pressing for an agreement on the new powers by the end of this year.

Spain's eurozone partners last summer agreed to extend a banking rescue loan of up to 100 billion euros ($136 billion) to shore up shaky Spanish institutions laden with weak assets since the collapse of a decade-long property bubble in 2008.

Madrid ended up using just 41 billion euros of the money for a bank restructuring programme, which ends in January, and the money it borrowed will automatically add to Spain's sovereign debt pile.

Economic growth is a major concern for Spain, the eurozone's fourth-biggest economy, which has just crawled timidly out of two years of recession with 0.1 percent growth in the third quarter of this year.

German minimum wage plan welcomed

Analysts say that level of growth is insufficient to create jobs in Spain, where the unemployment rate is 26 percent, rising to a staggering 54 percent for under-25s.

In their joint statement, France and Spain urged better coordination of European economic policies.

Hollande and Rajoy hailed German Chancellor Angela Merkel's announcement of a deal to create a coalition government as a boon for Europe.

Merkel's deal for a government with her main rivals the Social Democrats, includes the creation of a minimum wage in Europe's top economy and increased financing for education and infrastructure.

Hollande welcomed in particular the plan to introduce a minimum wage in Europe's most powerful economy.

"It is something we have requested from Germany for a long time given the competitive distortions than can exist in some industries, especially agriculture," he said.

Hollande also said the agreement to boost infrastructure investments would have consequences for activity in Germany "and the whole of Europe".

"If the agreement is confirmed, I would say it comes at the right time," Hollande said.

Spain's premier hailed the deal for its promise of providing stability over the next four years.

"It is good for Germany but I think it is also good for Europe," Rajoy said.

The French and Spanish leaders announced the launch of a high-speed direct railway service from Paris to Barcelona on December 15.

Officials say it will cut the non-stop train journey time between the two cities to six hours and 20 minutes.


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