Euro summit still on despite German crisis

EU leaders will meet as planned next month to discuss reforms to the euro despite the crisis in Germany over the collapse of Chancellor Angela Merkels coalition talks, EU President Donald Tusk said Wednesday.

"Just to be clear: The December Euro Summit is on," Tusk said on Twitter, referring to the planned December 15 meeting when leaders of 27 EU countries, except Britain, will mull the future of the single currency.

"As part of the Leaders’ Agenda we need to discuss what, how and when to move forward on the EMU and the Banking Union," Tusk said, adding that he had had a "good phone call" with Eurogroup chief Jeroen Dijsselbloem to prepare the ground.

Tusk's confirmation came after European Commission Vice President Valdis Dombrovskis told AFP that the German political crisis "cannot stop our work" on reforming the euro.

Going ahead with the meeting as planned will keep the EU on track to make key decisions on the future of the single currency in June, as Tusk proposed in a recent "leaders' agenda" for the next two years of summits.

European sources had previously warned that the summit in Brussels might be postponed, given the breakdown of Merkel's efforts to form a ruling coalition in Europe's biggest economy.

The prospect of Germany going without a proper government for months has raised fears of a knock-on effect on plans pushed by France's President Emmanuel Macron to use the shock of Brexit as a springboard to deepen economic and political ties.

Next month's euro summit will include the Eurogroup of 19 countries that use the single currency plus seven others that signed the 2012 European fiscal pact during the eurozone debt crisis.

The Czech Republic, which has not signed the treaty, and Croatia, which was not an EU member when the treaty was signed, will also both be invited as observers, but Britain will be left out of the cold.

The meeting will take place the day after a full summit of all 28 leaders which will decide whether talks on Britain's departure from the EU can move on from divorce issues to future trade relations.

The proposed euro reforms include a "budget line" for the eurozone, which could be used to stabilise countries in case of economic shocks, and transforming the eurozone's bailout fund into a dedicated European Monetary Fund.