France's Francois Hollande will push a proposal for mutualising European debt at an informal summit of EU leaders in Brussels this week, increasing pressure on German Chancellor Angela Merkel to drop her opposition to the idea.
The new French president raised the idea of bonds jointly underwritten by all euro zone member states during G8 talks at the weekend and intends to raise it again when EU leaders meet on May 23, even if it goes against Merkel's wishes.
"I will outline all growth proposals at this informal meeting," Hollande told reporters at the end of the G8 talks in Camp David on Saturday, referring to the Wednesday summit.
"Within this packet of proposals there will be eurobonds and I will not be alone in proposing them. I had confirmation on this at the G8."
He is expected to have firm backing from Italian Prime Minister Mario Monti, Spain's Mariano Rajoy and the European Commission, long a backer of euro bonds.
Germany opposes any early move, saying more progress is needed on coordinating fiscal policies across the euro zone. It has the backing of the Netherlands, Finland and other states.
The rapid deterioration in the euro zone debt crisis over the past month, with Greece's potential exit from the 17-country currency bloc no longer taboo, has brought the idea back to the forefront, with many economists and policymakers arguing it would be one of the best ways of restoring market confidence.
"The euro bonds debate is back front and centre and Hollande will have support from other leaders if he raises it," one EU official said. "It's not something that's going to happen overnight - there's a lot that needs to fall into place first - but there is a desire for a plan of action toward euro bonds." In a letter to EU leaders, European Council President Herman Van Rompuy urged them not to have any "taboos" at Wednesday's summit which is intended to focus on specific steps to stimulate growth and create jobs across the bloc. "It is not too early to think ahead and to reflect on possible more fundamental changes," he wrote. "In many ways, the perspective of moving towards a more integrated system would increase confidence in the euro and the European economy." ( C) Reuters