Merkel to deliver key speech to Bundestag

German Chancellor Angela Merkel will deliver a key speech to Germany's Bundestag parliament today as efforts continue to resolve the eurozone debt crisis.

Mrs Merkel will speak about Europe’s financial crisis and ahead of a summit of European Union leaders on December 9, whose goal is to deliver a long-term solution to the debt crisis.

Mrs Merkel has acknowledged the need for changes to the Maastricht Treaty to impose stricter financial controls on countries that use the euro common currency to prevent them from taking on too much debt.

Her speech today follows an address last night by Nicolas Sarkozy in which the French President said that he and Chancellor Merkel would push for fundamental changes to the European treaty governing the currency shared by 17 nations.

The French president said that during their meeting in Paris on Monday, he and the German leader

will unveil proposals to try to lift Europe out of its debt crisis and “guarantee” its future.

“France will push with Germany for a new European treaty refounding and rethinking the organisation of Europe,” Mr Sarkozy said.

“The Maastricht Treaty has revealed itself to be imperfect,” he added, referring to the pact that led to the creation of the euro in 1999.

“There can be no common currency without economic convergence without which the euro will be too strong for some, too weak for others, and the eurozone will break up,” the French president said before an audience of several thousand sympathisers of his conservative party in the southern port city of Toulon.

Changes in the treaty would have to be approved by all 27 EU members, 10 of which do not use the euro currency.

Mr Sarkozy said the process of reforming the treaty “will be long and difficult” but is necessary to protect Europe’s place in the world.

The French president will meet in Paris today with British Prime Minister David Cameron to discuss the sovereign debt crisis which is crippling Europe.

Chancellor George Osborne warned MPs this week that, while Britain was not yet heading for recession, further crisis in the eurozone could pull the UK economy under.

Downing Street said it was waiting to see the options paper for reform which European Council president Herman van Rompuy is drawing up for next week’s gathering of EU heads.

Mr Cameron’s official spokesman said: “Primarily what is being looked at here is rules for the eurozone.

“As with any negotiation in Europe we have to wait and see what is being proposed and see how we will respond.

Speculation is mounting that EU leaders will align their spending policies more closely to bring government debt levels under control in the future. This is seen as a necessary measure before the European Central Bank or other institutions can take more aggressive steps to help prevent the debt overload from destroying the euro and wreaking havoc in the global financial system.

On Wednesday, the US Federal Reserve, European Central Bank, Bank of England and the central banks of Canada, Japan and Switzerland said they were working together to make it easier for banks to borrow dollars.

The coordinated effort was meant to prevent Europe’s debt crisis from exploding into a global panic.

Should a European bank fail or if a country default on its debt, investors fear it could result in a freeze-up in global lending like the one that occurred in 2008 when Lehman Brothers collapsed.

The central bank action caused global stocks to rally yesterday.