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France and Germany agreed a British-style plan last night to head off financial meltdown by spending billions of euros to guarantee loans and the survival of leading banks.
After a briefing from Gordon Brown in the Élysée Palace, President Sark- ozy and Angela Merkel, the German Chancellor, agreed a joint pledge with the 13 other leaders of the eurozone to recapitalise banks and guarantee lending between them. “This needs concrete measures and unity: that is what we have today,” Mr Sarkozy said. “This plan addresses all aspects of the financial crisis,”
His comments followed a weekend of transatlantic action to relaunch confidence in a financial system that came close to a standstill last Friday.
The leaders, who spent three hours thrashing out details of their package, are to announce the size of their promised bailout today. Some leaders, including Yves Leterme of Belgium, wanted a figure attached to the package before markets opened in Asia last night, but Mr Sarkozy insisted that another 24 hours was needed for governments to organise their actions.
“What we need now is for each country to fix the sum that it wants to put aside. This should happen by Wednesday,” Didier Reynders, the Belgian Finance Minister, said. EU leaders are expected to endorse the package in Brussels on Wednesday.
The agreement stops well short of a central EU rescue fund that was floated by France ten days ago. but the accord on broad pan-European guarantees marks a shift from Germany’s insistence a week ago that each nation should take care of its own crisis.
“People have come a long way to reach this accord,” said Mr Sarkozy. “The crisis has over the past days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach.” The leaders pledged to help or directly subscribe to debt-raising by banks for periods of up to five years to complement efforts by the European Central Bank to unfreeze interbank lending markets.
Mrs Merkel said the deal would send a signal to panic-stricken markets but should not be seen as a blank cheque. “The capital that we are providing to banks comes with conditions, because taxpayers have the right to expect that if they are contributing to the stability of the financial system that this will be honoured,” she said.
“Tomorrow Germany will get to grips with its package of measures. We will do this together with France.”
The French President, whose country holds the rotating chairmanship of the European Union, called the pact an historic bridge between the European and the “Anglo-Saxon” system. “We had no difficulty in agreeing with Britain. It was historic to invite the British Prime Minister to a session of the eurozone,” he said.
Mr Sarkozy said he hoped that the rest of the 27-member union would sign up to the measures in Brussels. He also hopes to persuade the United States to agree to an international summit to draw up a new framework for the world financial system, he said.
Mr Brown said that he believed that “in the next few days confidence in the banking system will be restored”. He added: “This is an important moment for the world economy. The decisions we take over the next few days will affect us for the years ahead.”
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Inspirational.
Blair --not Brown, took us here. Brown, more than anyone else, has made the right steps towards getting us out (not saying it's a done deal).
As a french citizen constantly moaning about rosbif blindness but frustrated by Nico's incapacity, I am happy to rely on Gordon.
Ben, London,
Message Britain to Germany for +15 years: spend more,
consume more, save less, borrow more, dance the "Thatcher", kill the unions, regulate less, drop the euro,
change from manufacturing to service, liberalise capitalism.
So news over here point out the contradictions, not Browns "leadership".
Tim, Weikersheim, Germany
Thank goodness we now have a possible solution to "The crunch". No doubt the Tories will soon be bad mouthing Brown by suggesting he should have acted sooner, deregulated etc. Please don't tell me they would have done anything different. How many of them sit on boards and have directorships? yes?
gilly, Bordeaux, France
Brown has been brilliant in this crisis and some people here should get over it. We're finally seeing the collapse of Reagan/Thatcher economics - Blair never tackled it, Brown didn't for far too long. But he's been the only world star in this disaster.
Pete, Macclesfield, UK
If a night-watchman fell asleep then woke-up to find that most of what he was responsible for had disappeared and then expected us to replenish it would you say he had done a good job?
Brian Christley, Abergele, UK
Brown is always first with taxpayer handouts.
Question, it doesn't matter.
Answer, throw money at it.
Terry, Radstock, England
There is a big difference between this crisis and the two world wars. We face an economic threat rather than a military one! Fight economic problems with sound government and economics and fight military threats with tough military action!
Luke, London, UK
sarkozy's solution. He only based it on what Britain was doing first and no one else in Europe wanted it. I think that the UK is leading the solution!!! And I am saying that as a dissatisfied labour voter and someone who thinks the UK is lagging behind in the world with too much controls and greed.
garry, London,
Hold on, it isn't really a BROWN plan, It's a Brown copy of the 1995 Swedish solution:
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html
Michael, London, UK
George Scicluna. The banking free-for-all started in London and NY over ten years ago. Brown tailored economic policy on it because it offered a fast-track to growth. Other FM's adopted the model for the same reason. Having helped create the monster, they now claim to be our saviours from it.
Richard Crow , Warsaw, Poland
How can Brown & Darling claim credit for this bailout plan?It's what Sweden did in the 1990's, which is widely recognised as the model to stop a banking crisis.
What a pity Brown & Darling didn't look at how Sweden's property bubble created their mess in the first place! Stable door horse...
Fred, Moray, Scotland
I think we should all think about who's plan this is.Brown may be presenting it but it has the intellectual and practical influences of
Mervyn King .Bet you it was his team with the treasury notice how he kept appearing at Downing street.Just like GB to take the credit .His turn for the blame is due
rogerb, bridport,
The moment we get Mandy in and we see this. What's next? Embargo on Chinese imports now that they have weakened the pound? It's all posturing, smoke and mirrors - only the smoke is coming from burning of real money that have been bled from tax payers..
Jamie, London, UK
Oh HMKM - so it was Churchill who laid Europe to waste? Nothing to do with Hitler and the majority of the german population who supported him in his evil ambition? Your logic is as twisted as your understanding of this crisis - Gordon Brown's policies contributed directly to the boom in credit!
Huw Sayer, London, England
The Sarkozy solution was/is Europe's best bet.
Brown & Merkel et al nearly broke us all - and their lack of contribution should be recognised by the voters.
Banking confidence must be restored from one who knows first hand.... http://www.factbook.net/bcci.php
Richard, Stanstead Abbotts,
Gordon Brown did not vreat this situation. The World banks created the downfall, with their greed. GB is merely doing what is expected to save British people. It was Thatcher who once said,"There is no such thing as society, just individuals", and those " individuals" cashed in on our demise!!
George Scicluna, Geraldton, Australia
Perhaps now my bank will be "discouraged" from removing £28.00 from my account if I go 1p overdrawn?
Alan Henderson, Whitley Bay, England
Brown is one of the responsibles for the current situation who protected Hedgefonds and other untrustworthy forms of money making. 10 years ago the German financeminister Lafontaine proposed strict control of the financial markets. But anglo-american politicians didn`t accept it.
R. Stielzchen, Frankfurt, Germany
HMKM My history may be a little shaky, but was it not Hitler who laid waste to Europe? Does`nt say much for the validity of your comment regarding Thatcher does it?
peter east, Grays, UK
Gordon Brown, you are great !!!! It is time that UK, Germany and France march together, side bi side !!!! England is now a indipendend country not the 51 states of USA !!! Rigth or wrong you acted ! This is the opinion of a Italian living in P.R.China
franco praderio, suzhou, P. R China
If Brown was so great then why have we nothing in reserve for times like this? Tax, borrow and waste should be Brown's epitaph.
Kate, Newcastle , England
Joy Butler Germany. You think Brown is such a good Chancellor you have him!
sophie smith, london, uk
"Brown deserves to be recognised as Britains greatest leader, "
Bull!!. Britain was already headed into recession, his boom came to a bust. He has squandered billions of our money before ever this crisis came up and he ran policies that helped create the mess
Neil Murphy, cromer,
Maybe you should be directing your anger at the banks and the mortgage lenders of this world. We've been duped. But we all had a sneaking suspicion that the good times wouldn't last forever.New rules for lenders and buyers need implementing immediately, we've all been very very greedy!
Gavin, London, UK
Brown is now seen as a saviour in Europe, the crisis was global, not of his or even Labour's making. He has saved Europe but without laying it to waste as Churchill or destroying Industry as Thatcher. Brown deserves to be recognised as Britains greatest leader,
HMKM, Rosenheim, Germany
They need to let those overpaid stock promoters who act as CEO and let them go to third world countries, to cause damage to someone else's banking system.
Keith S, Winnipeg, Canada
Is this the daft leading the blind, or the blind leading the daft, either way it doesn't fill me with the slightest confidence, look at their track records!
ROBIN BECKETT, houston, United States
Quit criticising Gird Brown, he may not be a great Prime Minister, but he was a very good Financial Minister (Chancellor), and this package will save European banks and govts from complete collapse, if they all adopt it.
Joy Butler, Wiesbaden, Germany
Why is the EU listening to a person that led the UK to its current situation?
To Christopher H,
The EU GDP ppp per capita for Australia is the same as mainland Europe. The european countries are growing at different rates.
Andreas Andreou, Cyprus,
This is just spin to suggest that Brown is leading Europe.
The UK and America created this crisis, Germany, France and Spain have clear ideas about what need done.
They do not need Brown leading them, which indeed he is certainly not.
Brown is spinning to try and save his skin!
Willie Mac, Arden, Scotland
Call international rescue!!!!!!!!!
Clive Stringer, Devon, England
My what would Europe do without Britain and Brown!!
Brian P O Cinneide, eThekwini, Afrika Borwa
After 11 years at the financial helm where has Mr Gordon Brown got us? Why on earth would anyone trust this man to get us out of the mess that has got his fingerprints all over it?
rob, ashbourne, uk
Spin in Overdrive
Brown is like an arsonist that hangs around to help put out the fire, and then claims to be some kind of hero.
Douglas Maxwell, Richmond, Yorkshire
Kalber-Australia. Indeed, Keynsian defecit spending = Gov spends to get out from recession (miltary spend), economy inflates and perceived debt then drops. Unfortunately that will take a big big war. And with so many economies in trouble. This is not nice to contemplate, got room for 1 more in Oz??
Rod McLeod, Ostrava, Czech Republic
if it were a choice between GB's own political survival/ credibility/legacy or the (inevitable) global financial crisis having occurred at this time, which would he have chosen? Doubtless we can expect sickeningly smug rhetorical platitudes over the next few days/weeks if the G7 back him!
Anthony, Cheshire, UK
There nust be a comprehensive review of the entire global banking system. A new order of rules and regulations is required. CEOs must be paid a fixed salary of minimal proportions and be government official, and most importantely no stock market listing of banks.
Jim Wills, Brisbane, Australia
The EU has had a stagnant economy for decades, with very low rates of growth. How is this plan going to change that? The EU never understood that redistributing wealth does not create it, and the banks are ruined because there is no wealth. Nothing has changed.
Christopher H, Canberra, Australia
what happens to people who were dumb enough (like me) to hold a RBS bond (for 50K maturing in 09) ? Will the bank be forced to honor at maturity?
Michael Conde, Halifax, Canada
Ok, the UK govt plan is a decent one but anyone would think they had just invented the wheel. Theres nothing earth shattering in it.
The UK was out early because its banking sector was tumbling over the abyss at a relatively fast pace.
Spin is in overdrive. Erm...light touch regulation?
Brian Golden, Dublin, Ireland
Similarities to 1914 1939 ? US knows the impact of the crisis but ideology makes them late for the fight.
Robert Kalber, Sunbury, Australia
gb is going to bail out uk banks....impressive!
this wouldn't have anything to do with his management of the economy over 10 years, or his selling our bullion stocks at the lowest price for 20 years, would it?
and he wants us to believe he is the best man to "lead" us through this crisis. no problem
grindles, london, england
I hope this helps. I actually believe that the respective govts should open their own banks and guarantee to take over any and all banks that are about to fail in their resp countries. This would lower interbank fears and once this mess has cleared the shares of the bank could be sold, profitably.
olle, Lund, Sweden
The Spanish Finance Minister has indicated that Spain will not buy shares in Spanish Banks, because he thinks they are strong enough and can withstand the storm. Time will tell.
Nick Berry, San Javier, Spain
The US after having caused this mess, did exacerbate it by letting banks fail causing the credit crises and now protracted it by its ineffective bad debt buying plan. Ideologically blinded US did not want interfere in Free markets even after it proved necessary.
Joep Rijntjes, Lelystad, Netherlands