Econintetsect: "Team austerity" (led by UK, the Netherlands, Germany, Sweden and Austria) differed by €30 billion from "team spending" (led by France, Spain, Poland and Italy) in an effort to reach agreement on a €1 trillion for the 27-nation European Union budget for the seven years 2014-2020. The difference only amounts to 3% of the budget but that was enough to prompt EU president Herman Van Rompuy of Belgium to close the two-day meeting on Friday afternoon without reaching a final budget agreement. The failure came after a year of negotiations.
According to a report in the Financial Times, Von Rompuy remained optimistic in a statement issued after the meeting ended, but the FT also quoted others highly placed in the EU who had warned of dire consequences if the finance summit failed. The FT also cited reports that the failure highlighted a growing feud between French president Francois Hollande and German Chancellor Angela Merkel.
According to Bloomberg another budget attempt will not be made until after the first of the year.
In an interesting side bar, the response in Forex markets was a strengthening of the euro in late trading Friday (by 0.75%) and the Euro Stoxx 50 rose by 0.9%.
- EU budget talks collapse over €30 billion gap (Joshua Chaffin and Alex Barker, Financial Times)
- EU Budget Summit Fails in Echo of Debt-Crisis Stalemate (James G. Neuger and Svenja O'Donnell, Bloomberg)
- Forexpros Weekly Wrap-Up 23 November 2012 (Forexpros Staff, GEI Investing)