Merkel Backs Debt Sharing in Germany Amid Closer EU Push

Chancellor Angela Merkel’s government agreed to underwrite the debt of Germany’s states, backing a form of burden-sharing that she is resisting at the euro-area level to combat the financial crisis.

The federal government, facing pressure from the 16 states over tighter European Union budget rules, dropped its opposition to a form of shared debt sales to help the states escape a deficit squeeze and meet constitutional limits. The two layers of government plan their first joint debt sale in 2013, the government press office said in an e-mailed statement yesterday.