Morning:
9°c
Europe leaders are called to crisis summit in Paris
Joe Murphy, Political Editor02.10.08
Deep divisions opened in Europe today over how to tackle the credit crisis.
Gordon Brown announced that he will attend an emergency summit of EU leaders in Paris this weekend, called in an attempt to co-ordinate the approaches of different countries.
There were concerns over a proposal - quickly torpedoed by Britain and Germany - for a £250 billion Europewide bail-out fund to prop up the banks.
And a rowwas raging about the Irish government's go-it-alone decision to guarantee all bank deposits. Britain and other countries are concerned that the Irish deal risks undermining their own banks by making Dublin a more attractive haven for money.
The splits widened just as ministers breathed a sigh of relief that the US Senate had passed the $700 billion financial rescue package.
At the same time, Mr Brown is to form a committee of Cabinet ministers and top officials to respond to the economic crisis. It will be similar to the Government's "Cobra" unit that meets during national emergencies such as a natural disaster or an act of terrorism.
Led by the Prime Minister, the group will meet regularly to identify dangers such as failing banks and co-ordinate a rapid response. During major crises, it could meet daily or even several times a day. Its regular membership will include Chancellor Alistair Darling, his deputy Yvette Cooper and Business Secretary John Hutton. They will be joined by senior economists.
The Prime Minister spoke this morning to French President Nicolas Sarkozy, who will host Saturday's summit at the Elysée Palace with the Italian and German leaders.
Mr Sarkozy assured Mr Brown that, contrary to some reports, he would not be proposing a European bail-out, which could have involved British taxpayers' money being put at risk in foreign markets.
Downing Street was careful not to criticise the Irish government today, but said it expected the European Commission to investigate whether the bank guarantees given by Dublin were lawful under competition rules.
France and Spain were furious, however. French finance minister Christine Lagarde said: "When something happens in one member state it affects everybody else around." Spain's economy minister Pedro Solbes was reported to be planning to increase the guarantee limit on deposits unilaterally unless the EU struck an international agreement. The European Commission said it was "in close contact" with the Irish.
Meanwhile, the commission today cleared the Government's nationalisation of Bradford & Bingley.
