EU summit to tackle debt crisis contagion fears

| December 16, 2010 | 0 Comments
EU summit to tackle debt crisis contagion fears

European Union leaders are to meet in Brussels today to discuss the necessary action to avoid the debt crisis spreading to weaker euro zone nations, such as Portugal, Spain and Belgium.

The two-day summit will see leaders back the permanent crisis-resolution mechanism from 2013 - a deal struck last month by EU finance ministers.

They are also expected to consider boosting the existing bailout fund. Greece and Ireland have both been the recipient of bailout packages.

However, the two biggest European economies, Germany and France, have stated that less than 10% of the rescue funds have been committed so far, so there is currently no need to boost the fund.

There have been fears that Spain and Portugal could be next in line for a bailout as borrowing costs surge.

Belgium had its outlook on its sovereign debt lowered by Standard & Poor’s earlier this week with the risk of a downgrade.

Yesterday, rating agency Moody’s put Spanish bonds on watch for a possible downgrade due to its high funding requirements.

The euro has also been falling as the debt crisis intensifies but defending the currency, German Chancellor Angela Merkel said: “We know that the euro is our collective destiny, and Europe is our collective future.

“Nobody in Europe will be abandoned. Europe will succeed together.”

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