France leads call for EU-wide support to auto industry

17 October 2008

European Union (EU) leaders pledged to step up lending to industry, dropping the first hints that they may be forced to stimulate the economy as the banking crisis threatens a continent-wide recession. These promises came at a summit meeting of European leaders at Brussels, presided over by French President Nicolas Sarkozy.

Last month the approved funding for a $25-billion loan programme aimed at aiding the auto industry to build more fuel-efficient vehicles. (See: US House of Representatives approves $25-billion loan package for American auto industry)

Sarkozy called for his fellow heads of governments to consider a stimulus package to boost growth and help for the auto industry. But German and British officials said it was too early to set out a multibillion euro fund to kick-start an economy verging on recession.

Sarkozy said he had asked EU leaders meeting for two-day talks to coordinate their response to a sharp economic slowdown, building on their joint plan to shore up the banking sector. He said France and EU officials would come up with precise ideas in coming months.

But German Foreign Minister Frank-Walter Steinmeier said a plan "was not yet ripe for discussion." British Prime Minister Gordon Brown did not rule it out, saying it was "important to look at all aspects in the real economy to see what we can do" and stressing that Britain is already spending more to stoke growth.

The EU rejected a continent-wide pump-priming programme, diluting a statement drafted by Sarkozy that called for the ''necessary steps to react to the slowdown in demand.'' The final text spoke of the need to support growth and jobs.