French President Nicolas Sarkozy and German Chancellor Angela Merkel meet
over the financial crisis. Both leaders say the car industry needs protection
and are against any VAT cuts.

PARIS, FRANCE (NOVEMBER 24, 2008) FRANCE 2 -
German Chancellor Angela Merkel and French President Nicolas Sarkozy
promised to stand by Europe's ailiing auto industry, and ruled out VAT cuts
following talks in Paris on Monday (November 24).

In a news conference following the tenth Franco-German council of
ministers meeting, the two leaders said France and Germany were in agreement
about the need for further action in response to the financial crisis, and the
need for the response to be coordinated.

"We want to act rapidly and with strength for an economic
kickstart which has to be tailored to each country according to their
situation, and a coordinated one," Sarkozy said.

Both leaders distanced themselves from the idea of a temporary cut in
sales taxes as envisaged by the British government, saying they preferred
targeted aid that would encourage investment and help certain industries.

"A general decrease of VAT might be a solution for certain
countries but is not a good one for France and Germany, we both agree on this
point. We will have further discussions on the way that we can bring tailored
help," said Merkel.

Merkel and Sarkozy showed no sign of having patched up their main
differences on an EU growth package, with Berlin reluctant to back much new
spending now.

But Sarkozy told reporters that both countries were determined to
support European industry and said France would not abandon its ailing car
sector, which is struggling with slumping sales.

"What is certain is that we will not give up the car industry,
that's a constancy in Europe. Let me remind you that the car industry employs
10 percent of the working population in France, including the dealers,"
he said.

Merkel said Europe needed to look at what was being done in the United
States,
"Europe has to watch what is happening over there in order to be
in a position to react in an appropriate way - because I can't imagine that
the less environmentally-friendly cars would do better in competition - in the
distorted competition - with the most modern and the most
environmentally-friendly cars, and Europe will react to that," said
Merkel.

The European Commission is due to unveil its own ideas this week for
how the 27-nation bloc should tackle the recession, including a likely
suggestion that states contribute about 1 percent of the bloc's gross domestic
product to fund measures.

Germany has given a lukewarm reception to some of the plans and French
officials have expressed irritation over Merkel's reluctance to throw more
cash at an economic stimulus programme.

Germany fell into a recession in the third quarter of the year but
economists fear the worst is yet to come as businesses rein in investments and
nervous consumers curb their spending in anticipation of a deep downturn and
job cuts.

France has just managed to avoid slipping into a recession, but
economists expect a sharp economic contraction in the fourth quarter and a
gloomy 2009.