EU finance ministers tackle growth as economy slumps

EU finance ministers tackled ways of boosting the slumping economy on Tuesday as the debt crisis bites deeper, after eurozone ministers reported progress overnight on the Greek bailout.

All 27 European Union ministers gathered in Brussels as the European economy shows every sign of slumping into recession, dragging down even Germany, Europe's powerhouse and paymaster, which no longer appears immune.

The downturn has been made worse by the grim austerity measures governments have adopted to balance public finances and reduce debt, stoking calls for a change to more pro-growth policies.

Against this backdrop, ministers were discussing measures to boost economic policy coordination and oversight, controversial plans for a single European bank regulator, and the introduction of a Financial Transactions Tax.

The Single Supervisory Mechanism for the banks is a key element in Europe's new debt defences but is also a major bone of contention between euro- and non-euro states led by Britain, which jealously guards the interests of the City of London, one of the world's top financial markets.

France and Germany meanwhile differ over the scope of the new regulator, with Paris saying it should oversee all banks while Berlin argues it should only cover the biggest and most important, at least initially.

Their two finance ministers held a meeting and press conference before joining their colleagues Tuesday, highlighting their shared views after concerns surfaced in Germany about the stagnating French economy.

"There is no estrangement," French Finance Minister Pierre Moscovici said, stressing the importance of their shared views.

"I have been working in confidence with (Finance Minister) Wolfgang Schaeuble since the first day I took office. My first phone call was to him, my first trip too," he stressed.

Schaeuble replied in kind, saying relations were "very friendly."

"We have confidence in the French government's policies. We do not lecture others ... We have confidence in each other," he said, knocking back any suggestion that France should be considered the sick man of Europe.

French Prime Minister Jean-Marc Ayrault visits Berlin on Thursday to soothe German fears that Paris will fail to push through decisive reforms in Europe's second biggest economy.

On Monday, finance ministers of the 17-nation eurozone agreed that while Greece had made substantial progress on its debt bailout programme, they would still have to meet again on November 20 to clear the way for a long-delayed aid payment.

Ministers acknowledged "the considerable efforts" made by Greece and accordingly agreed to a request from Athens for more time to put its house in order.

Greece wants its current 240-billion-euro bailout accord running to 2014 to be extended to 2016, giving it more time to meet targets which have been torpedoed by a far deeper economic slump than expected.

There is a cost involved, however.

A draft report by the EU, International Monetary Fund and the European Central Bank puts extra funding that will be needed for the extra two years at nearly 33 billion euros, raising questions as to who will pay.

Ministers are also expected on Tuesday to mull an EU proposal for a Financial Transaction Tax.

The tax was partly intended to raise new funds and partly aimed at capping banking sector excesses blamed for the global financial crisis of 2008 which morphed into the debt crisis.

Facing opposition, the idea was dropped but 11 eurozone states led by France and Germany have returned to the charge, seeking to implement it on their own.

With the backing of more than a third of the 27 EU member nations, the measure can be implemented under an "enhanced cooperation" procedure but it will still need the blessing of the other EU member states who will not be adopting it.

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