Joint press conference by José Manuel Barroso, president of the EC and Olli Rehn, Economics and Monetary Affairs commissioner, on the adoption of new economic governance package including stability bonds (the new name for eurobonds) green paper and 2012 Annual Growth Survey, Brussels, Nov 23, 2011.

José Manuel Barroso, European Commission (EC) president, today unveiled plans for common eurobonds, in the face of German opposition. Meanwhile an auction of German bonds also today was a flop and Angela Merkel, the German chancellor, said there is no 'immediate solution" to the crisis.

The EC is launching a consultation to assess if the 17 Eurozone countries can use the bonds to raise cash.

The Commission has published a draft regulation which would allow it to review draft budgets of Eurozone countries by mid-October and ask for revisions if they were not in line with EU budget rules.

The budget drafts would have to be based on independent forecasts.

Another regulation would create a legal basis for heavy surveillance of policies of a country either already getting emergency financial aid from the euro zone or facing serious financial instability.

"To return to growth, member states need to raise their game when it comes to implementing their commitments to structural reforms, as well as embrace deeper integration for the euro area," Barroso said.

Commission proposals

Angela Merkel, the German chancellor, said in a speech to Germany's main employers' association that so-called eurobonds "have just come very much back into fashion."

She said what's important is to address shortcomings in the construction of the Eurozone.

"If at all, this discussion belongs at the end -- so I don't find it particularly fitting that we are now once again conducting it in the middle of the crisis, as if it were the answer to this crisis," Merkel said. "In the long term, it isn't."

Merkel also reaffirmed her opposition to a ramping up of bond-buying campaign by the European Central Bank as a way of relieving pressure on other countries' borrowing costs.

She said of hopes of an immediate solution to the crisis: "I say yet again: there won't be one."

German bond sale

Germany was only able to sell €3.644bn of the €6bn in 10-year bunds on auction today at an average yield of 1.98%. The result was viewed as a serious development.

Meanwhile Eurozone recession fears intensified as industrial orders fell 6.4% and flash PMI (Purchasing Managers' Index)  data showed that the manufacturing and services sectors contracted again in November.

Dow Jones quotes a German Finance Agency spokesman that the auction reflected a nervous market but the "result doesn't mean any refinancing bottleneck for the budget."

The European Central Bank on Wednesday again purchased Italian and Spanish bonds and reports are circulating that that Belgium can't pay its agreed share of the planned rescue of the Belgian-French bank Dexia S.A., which is seen as transferring more risk to the French government, risking its triple-A credit rating.

The German 10-year yield is back above 2%. The yield on the 10-year Spanish government bond was up 0.05 percentage points higher at 6.63% and the yield on the 10-year French bond was up 0.10 percentage points at 3.61%.

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