US keeps up pressure on Europe as crisis weighs on Obama election hopes - Telegraph.co.uk

Under intense pressure from the US, Britain and China, as well as bond investors, Chancellor Angela Merkel and French President Francois Hollande agreed at yesterday's G20 summit in Mexico to accelerate moves towards creating a banking union between the 17 countries that use the single currency.

"It's going to be really a critical summit for them," Tim Geithner, the US Treasury Secretary, said of next week's Brussels meeting. "You're going to hear more from the European leaders in the coming days about the specific proposals they're going to put in place."

Having lost ground in opinion polls over the last month, putting pressure on European governments to restore investors' confidence is becoming a matter of urgency to President Barack Obama. Last night he admitted that Europe could affect the outcome of November's presidential election.
The Americans believe that if Europe quickly lays out a timetable for adding the fiscal and banking union that the euro has so far lacked it will ease the financial tensions that have caused sharp gyrations in US stock markets over the last 12 months.
"I'm confident that over the next several weeks Europe will paint a picture of where they need to go," Mr Obama said at a press conference in Los Cabos last night.
Prime Minister David Cameron also voiced optimism that European governments will soon lay out a timetable for more radical steps.
"What I've sensed at this summit is that there is a fresh impetus for the eurozone members to use all the mechanisms and firepower that they have to stand up for their currency," Mr Cameron said.
However, there is also an acknowledgment among officials in the UK and the US that tackling the eurozone crisis is a far more complicated and risky challenge than that faced by either Britain or America when they were confronted with their own financial crises in the autumn of 2008.
Analysts say the success of any firefighting measures designed to bring down borrowing costs for Spain and Italy ultimately depends on whether investors believe Europe's population has the appetite for closer economic and potentially political integration.

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