Euro zone leaders must act in an "overwhelming" manner to restore market confidence, Canadian Finance Minister Jim Flaherty has said.
Minister Flaherty was in Galway today to meet with Finance Minister Michael Noonan at the launch the Centre of Study of Irish Economic Policy in NUI, Galway.
He joined Michael Noonan in discussing "The Financial Crisis; International and National Perpectives".
"The incremental approach has failed, to restore market confidence one must act in an overwhelming way," Mr Flaherty said in a speech.
He said he was also worried about the state of the US economy and said political gridlock in Washington was a serious concern.
Commenting on the EU summit, he said he believed from his G7 contact that Germany was committed to the euro but despite the difficult choices needs it faces needs to take a leadership role.
Michael Noonan said that he is confident of a reasonable outcome at the summit and the question is if it is sufficient to be a gamechanger at this point. He expects announcements focused on Spain and Italy at the summit with progress on the Van Rompuy document.
Medium-term plans need to be brought forward - Noonan
He also said that Euro zone leaders need to bring forward their medium-term plans if they are to make progress in tackling the continent's debt crisis.
"There is an uncertainty about Europe and the euro zone, and unless the medium term plan is brought forward this weekend and presented as a road map then I think that there won't be a good result," Michael Noonan said.
He called for leaders to discuss the idea of mutualising bank debt, a move that has been resisted by Germany.
Weak economic growth means that Ireland's budget this year will be as difficult if not more difficult than last year's, he added.
GDP to grow 0.7% in 2012 - Noonan
Ireland expects its gross domestic product to grow 0.7% in 2012 but this is dependent on the performance of the rest of the euro zone and what measures are brought in to address its debt crisis, Minister Noonan said.
"We'll see what the second half of the year holds, we'll be hoping for an upside (in growth) but that's contingent on what happens in Europe and indeed what happens (at the EU summit) over the next 48 hours," he told journalists in Galway.
‘Van Rompuy paper’ for fiscal union
Michael Noonan has said that European Council President Herman Van Rompuys road map is a good starting point, and could on its own have been a solution 12 months ago, but that action is needed on Spain and Italy in the next 48 hours.
Asked if he was confident that a resolution could be reached at the summit he said it depends on whether, in Germany's case, it is a negotiating strategy or true opposition to mutualising debt.
He said he believes that Germany will move when they get what they are looking for which is legal guarantee of countries abiding by the rules.