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| Europe to set out economic plans | |
| (about 2 hours later) | |
| EU member states are being urged to sign up to an economic recovery plan proposed by the European Commission. | |
| The Commission says a combination of tax cuts and targeted investment has to be co-ordinated across the bloc. | |
| The plan being unveiled on Wednesday is expected to total 130bn euro (£110bn) - about 1% of the EU member states' GDP. | |
| France and Germany's leaders have called on the EU to ease fiscal rules to allow nations to spend more to boost their economies. | |
| A requirement to hold a public deficit below 3% of GDP should be eased, Nicolas Sarkozy and Angela Merkel said. | A requirement to hold a public deficit below 3% of GDP should be eased, Nicolas Sarkozy and Angela Merkel said. |
| The two leaders made their comments in a joint newspaper article, to be published on Wednesday, saying that governments had to head off a "recessionary spiral" at home. | |
| 'Different situations' | 'Different situations' |
| The Commission has suggested that tax cuts could be made on Value Added Tax, energy efficient goods and labour taxes, while the investment should be focused on construction and car makers. | |
| The BBC's Europe editor Mark Mardell says the emphasis is on the 27 countries acting together - partly so no-one gets an unfair advantage but also because the Commission hopes it will have a much bigger impact on the whole economy of Europe. | |
| Sarkozy and Merkel are grappling with economic challengesThe expected EU package was a "good target" they added in the piece to appear in France's Le Figaro and Germany's Frankfurter Allgemeine Zeitung. | |
| "There is no single model for recovery that can be applied to the 27 member states with very different budgetary and economic situations," they added. | "There is no single model for recovery that can be applied to the 27 member states with very different budgetary and economic situations," they added. |
| "But we believe that co-ordinated budgetary stimulus can restore the confidence of consumers and investors and prevent opportunistic actions between states which share much more than institutions." | |
| The EU Stability and Growth Pact - which all member nations sign up to - requires a country's annual public deficit to remain below 3% of its GDP. | The EU Stability and Growth Pact - which all member nations sign up to - requires a country's annual public deficit to remain below 3% of its GDP. |
| But the treaty says there is room for more flexibility in these rules during severe economic downturn. | But the treaty says there is room for more flexibility in these rules during severe economic downturn. |
| "The debate could be swift on this point, since the pact foresees margins in the short term which must be used," wrote President Sarkozy and Chancellor Merkel. | "The debate could be swift on this point, since the pact foresees margins in the short term which must be used," wrote President Sarkozy and Chancellor Merkel. |
| Spending goals | Spending goals |
| France has said it plans to inject 19bn euro into some of its key industries - including construction and the car industry - to kick-start its economy | |
| Full details of the rescue plan are due within 10 days, President Sarkozy said. | |
| Earlier this month, Germany announced a string of measures to stimulate economic activity - including tax breaks and infrastructure spending worth 32bn euro over two years. |