EU STATES' RESPONSE:A SUCCESSION of national responses by European Union countries may lead to a "renationalisation" of the financial system, which would harm integration, European Commission President José Manuel Barroso said yesterday
He also warned that aid by EU member-states to their financial sectors amid the global crisis should not lead to competition distortion, adding that the sheer size of some European banks was making national solutions insufficient.
His comments reflect Brussels' concern that member-states are ignoring the EU single market rulebook, notably concerning limits on state aid to industry and budget discipline, in their haste to react to the market turmoil.
"A succession of national responses may cause the renationalisation of the European financial system, which would be a setback for European integration," Mr Barroso told a conference on European prospects in Lisbon.
"I want to underline that the fundamental principles of the single market cannot be compromised. It would be unacceptable that measures aimed at helping the banks in trouble would be used to strengthen their positions compared to competition," Mr Barroso said, calling for a joint "European solution".
The EU's four biggest economies - Germany, France, Britain and Italy - and heads of EU financial institutions pledged to co-ordinate their national measures over the weekend but just a day later Germany issued a similar blanket guarantee of deposits in its banks.
Denmark, Austria and Sweden quickly followed suit.
Nevertheless, Mr Barroso said that it was crucial and urgent to provide guarantees that bank deposits will not be affected. - (Bloomberg)