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Merkel-Sarkozy Letter Proposes Tighter Budget Rules in EU Treaty Overhaul

French President Nicolas Sarkozy and German Chancellor Angela Merkel proposed amending European treaties to tighten rules on deficit spending and water down provisions demanding investor losses.

In a joint letter to European Union President Herman Van Rompuy, the French and German leaders said they want a decision at an EU summit starting tomorrow so that the measures can be ready by March 2012.

The new treaty should call for “automatic consequences” for euro-zone members with deficits over 3 percent of their economic output. The treaty should “make clear that Greece required a unique and exceptional solution” and that other euro-area members “reaffirm their inflexible determination to honor fully their own individual sovereign signature.”

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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