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Germany launches euro pact ratification
BERLIN—Chancellor Angela Merkel’s Cabinet yesterday launched the process of ratifying the new European Union fiscal-discipline pact in Germany, and will now need the opposition’s help to secure a two-thirds majority in Parliament.
Merkel pushed hard for other European countries to agree to the so-called fiscal compact, designed to limit government overspending, and 25 national leaders signed it last week. Yesterday, her Cabinet approved legislation to enshrine the pact in German law. It isn’t yet clear when the German Parliament will consider the deal. Officials say it needs a two-thirds majority because the pact turns the so-called “debt brake,” or balanced-budget rule, in the German constitution into an internationally binding commitment—making it much more difficult to German lawmakers to change it in future.
Merkel’s centre-right coalition holds 330 of the 620 seats in the lower house, or Bundestag. That means she needs at least the support of the biggest opposition party, the centre-left Social Democrats, to get the fiscal pact passed. The Social Democrats, who have largely supported Merkel in votes on eurozone rescue measures, want to try and extract concessions from the chancellor in exchange for their support this time—particularly on a tax on financial transactions.
Merkel hasn’t pushed forward with such a tax because it faces resistance in parts of her coalition. The Free Democrats, her junior coalition partner, object to the idea of introducing a transaction tax only in the 17-nation eurozone —leaving out Britain and its large financial sector.
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