Brown heads to Paris for 'crisis' summit

Prime Minister Gordon Brown will attend an emergency summit in Paris to discuss Europe's response to the financial crisis. The leaders of the four EU nations belonging to the G8 group of most industrialised countries - France, Germany, the UK and Italy - will be joined by the head of the European Central Bank and the President of the European Commission. The meeting is supposed to show solidarity - but divisions are growing over how far to go in regulating the money markets and bailing out failing banks and finance houses. The scheduled four-hour meeting will welcome Washington's approval of a massive $700 billion (£397 billion) rescue package to restore confidence in Wall Street. But suggestions of a similar central pot of cash to be set up for the 27-nation EU bloc have received such a poor response that French ministers are denying it was their idea. Only the Dutch seem to approve of the notion of getting 27 countries to contribute to a fund used when one of the member states' key banks or financial institutions face serious trouble. French President Nicolas Sarkozy, hosting the Paris meeting, has now denied suggesting the idea. The UK, Germany and the EU Commission in particular are strongly opposed. Instead, the four leaders are likely to look at ways of strengthening cooperation within Europe to prop up confidence and ensure proper functioning of financial markets in future. That, according to the Commission, must revolve around better use of the existing EU state aid and fair competition rules. A Commission spokesman insisted: "These rules are part of the solution, not the problem." Tighter controls on credit rating agencies are already in the EU legal pipeline, and tighter solvency requirements for European banks were proposed by the Commission earlier this week. But the stumbling block to a united front in the face of the continuing financial gloom is growing tension over Ireland's decision to establish a sweeping 100 per cent guarantee pledge for depositors in the country's six largest banks.

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ITN | October 4, 2008

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