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EU banks summit today

They will meet at the Elysee palace after being warned by a group of leading economists that without a common response, Europe could be faced with a 1930s-style depression, putting the savings of hundreds of millions of people at risk and destroying millions of jobs and businesses.

But it was clear on Thursday night that there is no consensus among the European leaders about what action to take and they have rejected a French-inspired idea of following the U.S. and creating a “Euro-tarp” or troubled asset relief programme (bailout).

That could have been worth €300 b compared with the $700 b (€496 b) Paulson plan.

But one senior Brussels official said: “It’s dead, fini, kaput.” Jean-Claude Trichet, president of the European Central Bank, said it simply did not fit the political structure of a non-federal EU. Angela Merkel, the German Chancellor, Silvio Berlusconi, Italy’s Prime Minister, and Gordon Brown, the British Premier and their host, French President Nicolas Sarkozy, are most likely to endorse a scheme to earmark national reserves that could be injected as public equity into failing banks.

Jan Peter Balkenende, the Dutch prime Minister, said after talks with Mr. Sarkozy in Paris that the reserve could amount to 3 per cent of each country’s GDP, compared with 5 per cent in the U.S. plan. “If you put that together, it’s a lot of money,” he said. — © Guardian Newspapers Limited, 2008

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