Germany said on Friday there were "no plans and no desire" for joint fiscal policy in the euro zone, pointing out that reforms under way already provide for closer cooperation between member states on economic policy.
Spanish Prime Minister Jose Luis Rodriguez Zapatero this week called for the euro zone to develop a much more integrated fiscal policy as well as a common economic policy to counter the sorts of pressures that sparked debt crises in Greece and Ireland.
"There are no plans and there is no desire for a joint fiscal policy," said chief government spokesman Steffen Seibert. "A decisive reform of the stability and growth pact already leads to closer cooperation on economic policy."
Seibert told a regular news conference the case of Ireland's corporate tax illustrated this. Dublin has rejected suggestions from European politicians, including in Germany, that it should raise its low corporate tax to reduce its deficit.
European Central Bank President Jean-Claude Trichet on Friday urged euro zone governments to press ahead with a "quantum leap" in fiscal governance in response to the crisis.
The official position of most EU leaders is that deciding on tax levels is a matter for individual governments.
But there is discussion in the euro zone, led by France, on the need for some form of fiscal union or "economic government" in the 16-member euro zone — an idea Chancellor Angela Merkel began supporting in early 2010.
However, although Germany favours closer policy convergence across Europe, Berlin voices strong objections to anything that risks turning the bloc into a "transfer union" where one country — inevitably Germany — bails out the others. It tends to see policy convergence as a way of encouraging German-style fiscal discipline among its more wayward European partners.
France and Germany hold a regular bilateral summit at the end of next week and Seibert said the euro would be on the agenda when Merkel meets French President Nicolas Sarkozy.
"In every meeting Germany and France hold at the moment, the problems relating to European policy and the euro are always near the top of the agenda, so you can assume that this will be discussed," Seibert said.
The German and French leaders upset some of their partners by bilaterally agreeing in the French resort of Deauville in October to propose changes to the EU treaty in order to set up a permanent mechanism for handling future euro-zone crises.
Merkel's subsequent insistence that this should involve making private investors share in sovereign debt risk from 2013 onwards, when the new mechanism would come into effect, roiled markets ahead of the Irish rescue deal.
But the German government has denied any responsibility for pushing up the debt costs of peripheral euro zone countries such as Greece, Ireland and Portugal with this position.
"I reject any direct link that is sometimes made between the political initiatives that Germany and France have made and the development of interest rates on (government bonds)," said Seibert, adding there was no single explanation for the euro's instability.
