U.S. sounds EU alarm as Merkel pushes political unionJune 8, 2012
US Federal Reserve Chairman Ben Bernanke became the latest to sound the alarm over the European crisis as German Chancellor Angela Merkel pushed for a stronger European political union.
Amid growing international calls for action as a brutal Spain ratings downgrade heightened the eurozone crisis, Merkel held talks in Berlin with British Prime Minister David Cameron.
The two leaders agreed that closer fiscal discipline in the European Union alone was not enough to stem more than two years of turbulence as the clock ticks down for Europe to help stabilise Spain’s banking system.
The EU fiscal pact is “necessary but not the only precondition,” Merkel said, while Cameron, who has opted out of the pact, called it “important but not sufficient” to fight the crisis.
Merkel also said it was “important to stress that we have created instruments for support in the eurozone” and Germany, seen by some EU partners as being inflexible and reluctant to change, backed their use.
With EU leaders seeking an accord at another crunch summit on June 28-29, the crisis took another twist Thursday when Fitch slashed Spain’s credit rating by three notches Thursday, from A to BBB.
Spain’s banks now needed “around 60 billion euros ($75 billion) and as high as 100 billion euros ($125 billion) in a more severe stress scenario,” Fitch Ratings said, more than double its previous estimate for their restructuring costs.