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Leaders of top euro zone economies agree on EUR130BN growth package

France, Germany, Italy and Spain announced the growth package ahead of a European Union summit next week.

Euro zone leaders 2012 6 22Enlarge
Leaders from Spain, France, Italy and Germany met in Rome today ahead of a European Union summit next week. (Pool/Getty Images)

The leaders of the euro zone’s four largest economies have agreed in principle to a 130 billion euro ($163 billion) growth package aimed at spurring economic activity and shoring up banks in floundering economies in the region, the Guardian reported.

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France, Germany, Italy and Spain made the announcement following a meeting in Rome ahead of a European Union summit next week where the precise terms of the deal will be thrashed out.

According to Agence France-Presse, recently elected French President Francois Hollande told a press conference that the leaders had agreed to mobilize “one percent of European GDP, that is 120 to 130 billion euros” to boost growth.

But there were obvious signs of continued discord between the leaders, with German Chancellor Angela Merkel shooting down a plan backed by the French, Spanish and Italian leaders to use European bailout funds to buy sovereign debt with the aim of reining in soaring borrowing costs for countries such as Spain and Italy.

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"Each country wants to help another country that is in trouble, but for the taxpayers, I must have the guarantee that there is control," Merkel said, according to Market News International.

"Responsibility and control go hand in hand."

Merkel also made it clear that she still supported controversial austerity measures that have triggered sometimes violent protests in Greece, Spain and elsewhere, the BBC noted.

Spain's government, meanwhile, said it would formally request aid for its stricken banking sector on Monday, the Wall Street Journal reported.

http://www.globalpost.com/dispatch/news/regions/europe/italy/120622/leaders-top-euro-zone-economies-agree-eur130bn-growth-pack