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December 17, 2010    

EU agrees to set up permanent euro zone bailout fund

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by Kay Murchie
EU agrees to set up permanent euro zone bailout fund

At yesterday‘s EU summit, leaders agreed to establish a permanent mechanism to bailout any nation whose large public deficits threaten the 16-member euro zone.

The agreement comes after Greece and Ireland have already been the recipients of multi-billion euro bailouts from the European Union and the International Monetary Fund.

EU President Herman Van Rompuy said leaders were prepared to take whatever action required to protect the currency.

The 27 leaders, who met in Brussels yesterday, agreed that in 2013 the permanent mechanism would succeed the euro zone’s €750 billion (£637 billion) temporary bail-out fund - known as the European Financial Stability Facility.

The summit occurred at a tense time as concern mounts about stability in the euro zone. Fears are being raised for weaker euro zone nations and speculation increases that Portugal and Spain could be next in line for a bailout as borrowing costs surge.

However, both countries continue to strongly deny the claims.

However, earlier this week, ratings agency Moody’s warned it may downgrade Spain’s debt.

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