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Eurozone Crisis: Merkel And Sarkozy Call For New Treaty To Save Euro As Standard And Poor's Issues Credit Rating Warning

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MERKEL
PA

A fresh attempt by France and Germany to resolve the eurozone crisis has been met with 15 euro zone nations being placed on "credit watch negative" by ratings agency Standard and Poor's.

The news means the AAA rating of Germany could be under threat.

In a statement, Standard and Poor's said: "Today's CreditWatch placements are prompted by our belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole."

Following crisis talks in Paris on Monday afternoon, French President Nicolas Sarkozy and German Chancellor Angela Merkel said that eurozone states should face sanctions for running up large deficits.

They declared they want a new European treaty, either with the entire EU or just the eurozone to solve the financial crisis.

The pair called for the 27 countries of the EU to move towards greater fiscal integration to ensure the current financial crisis is not repeated. If that was not possible, just the 17 states that have adopted the euro should move forward, they said.

"Whatever has happened must never happen again, and it's for this reason we want a new treaty," said Sarkozy. "This is what Germany and France want."

Sarkozy said that the two countries were "in full and total agreement that eurobonds are no solution to the crisis at all".

"We are going through a very difficult situation," said Merkel. "We should recover the trust in the market and our trust in the eurozone. And during the next Thursday and Friday summit we should recover this trust and consolidate our commitments."

The German chancellor added that as Europe's two major economies, Germany and France should shoulder the heavy responsibility.

"This package shows that we are absolutely determined to keep the euro as a stable currency and as an important contributor to European stability," said Merkel.

Speaking shortly after the European leaders, David Cameron told an audience in London that should there be a change to the European treaty, the government would make sure that Britain gets something in order to "enhance, protect, and defend our national interest".

"I think there is a danger here that European leaders will miss what really needs to be done in terms of Europe and the eurozone," he said.

The prime minister added the underlying problem in Europe is one of competitiveness and said that any amendments to the treaty that resulted in pushing power from the UK to Brussels would be put to a national referendum.

“I’m not intending to pass any powers from London to Brussels so I don’t think the issue will arise," he said.

On Friday, delegates from EU states are due to meet to discuss the future of the single currency.

Standard & Poor's downgraded the USA from AAA after the debt ceiling crisis in August.

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