* Merkel and Cameron meet after war of words on euro
* Berlin, London no closer on financial transaction tax
* Cameron wants "power and punch", Merkel goes "step by
(Recasts after news conference)
By Stephen Brown
BERLIN, Nov 18 The leaders of Germany and
Britain sent out conflicting signals on Friday about how to
solve the euro zone's debt crisis and admitted they had failed
to narrow differences over the introduction of a financial
transaction tax in Europe.
At a news conference in Berlin, British Prime Minister David
Cameron and German Chancellor Angela Merkel tried to paper over
divergent views on European policy that have sparked a war of
words between politicians and media in both countries.
But they could not mask differences over how the single
currency bloc's debt crisis should be handled, with Cameron
calling for "decisive action" to stabilise the euro zone and
Merkel making clear she favoured a "step-by-step" approach.
"My German isn't that good, I think a bazooka is a
superwaffe, am I right?" Cameron said in response to a question
about his call for euro zone policymakers to use a "big bazooka"
approach to the crisis.
"The chancellor and I would agree that whatever you call
this we need to take decisive action to help stabilise the euro
zone," he said, citing the need for strong action on Greece, a
rescue fund with "power and punch" and a recapitalisation of
Merkel struck a more cautious note. She has come under
pressure to support bolder crisis-fighting steps from the
European Central Bank (ECB), such as using it as a lender of
last resort for the bloc or backstop for the bloc's bailout
fund, the so-called European Financial Stability Facility
So far she has resisted, backing the argument of the German
Bundesbank that this would violate the ECB's inflation-focused
policy mandate. She is focusing on changes to the EU's Lisbon
Treaty to force other euro members to adopt German budget
"The British demand that we use a large amount of firepower
to win back credibility for the euro zone is right. But we have
to take care that we don't pretend to have powers we don't have.
Because the markets will figure out very quickly that this won't
Asked about Germany's push for the introduction of a
financial transaction tax in Europe, Merkel admitted the two
leaders "did not make any progress".
"Naturally there are differences. But Europe can only
prevail if all the strong countries of the European continent
are represented and if we have a bit of tolerance for the
different views," Merkel said.
At a meeting of Merkel's Christian Democrats (CDU) earlier
this week, the parliamentary leader from her party accused
Britain of "only defending its own interests" and announced
triumphantly that "Europe is speaking German all of a sudden", a
reference to widespread acceptance of German fiscal rigour
across the bloc.
The comments sparked a strong reaction in the British press
with the Daily Mail saying: "We no longer need to fear the
jackboot but we have a great deal to fear from German bossy
Germany's top-selling Bild newspaper retaliated, asking on
the morning of Cameron's visit: "What is England still doing in
** For the latest news on Europe's debt crisis, see
(Reporting by Stephen Brown and Andreas Rinke; Writing by Noah
Barkin; Editing by Jon Hemming)