European leaders gather to discuss global crisis

EUROPEAN leaders will gather in Paris tomorrow for an emergency summit on the global financial crisis.

But proposals on the table will not include any EU-wide bailout like the $700 billion dollar (€507bn) package being debated in the US.

The meeting, arranged by French president Nicolas Sarkozy, will also include the leaders of Germany and Italy along with the presidents of the EU Commission and European Central Bank. A British government spokesman also confirmed it had been in “close contact” with the Irish Government over its controversial plan to guarantee all deposits.

The measure sparked concerns that depositors looking for a haven for their savings will pull funds out of British banks — where only the first £35,000 (€45,000) is guaranteed — and transfer them to Irish accounts.

“We have obviously been discussing these issues with our European partners, the European Commission, and with the Irish Government, as you would expect,” the spokesman said.

“If there are any single market or state aid issues arising, that is a matter for the European Commission.”

British prime minister Gordon Brown has refused to meet calls for a similar guarantee, although the sum covered will be raised to £50,000 (€64,000). The spokesman also indicated that it is considering setting up an emergency committee to take charge of Britain’s response to the financial crisis. A newspaper report said the body would be similar to the “Cobra” committees of ministers and officials convened at times of other crises such as floods or terror attacks.

“It is right that the government looks at whether we have the right mechanisms in place to deal with global challenges,” the spokesman added.

On Wednesday night, the US Senate voted to back a revised version of the bailout package.

It still has to be passed by the House of Representatives, whose rejection of it earlier this week caused share prices to plummet.

New banking rules to clamp down on the causes of the crisis were put forward by the EU yesterday.

Among the demands from the European Commission was that sellers of risky loans be made to hang-on to part of the investment and share the risk.

The French president’s office said tomorrow’s summit would prepare European positions ahead of a meeting of the finance ministers of the G7 rich developed nations in Washington on October 10.