Last night desperate European leaders tried to negotiate a £1trillion bailout package to save the Eurozone from collapsing. German Chancellor Angela Merkel says “the world is looking at Germany”.
Amidst more encouraging news elsewhere in the world, further speculation on the Eurozone debt crisis sparked controversy this week. Despite a seemingly successful initial meeting between EU countries yesterday, this currently remains the primary concern to investors everywhere in the lead up to further crisis meetings over the coming month.
The market’s stability was relying heavily on the 27-leader EU policymakers putting together a substantial package of economic reform. As a result global equities rose at the end of last week, however talks of Eurozone leaders devaluing Greek assets by 60% rather than the before-speculated 40% disturbed this initial confidence.
Last night desperate European leaders tried to negotiate a £1trillion bailout package to save the Eurozone from collapsing. German Chancellor Angela Merkel stated that “The world is looking at Germany” and that “[I say] if the Euro fails, Europe will fail – and that mustn’t happen.” These sentiments led her parliament to approve a plan to increase Europe’s financial safety net fourfold to stop a collapse of confidence in the Euro. The urgency of such a plan was increased by signs that Italy and Spain look close to following Greece, with Portugal and Ireland also displaying signs of needing assistance.
The plan to boost the European Financial Stability Facility was yesterday agreed in principle, and includes a recapitalisation of Europe’s most vulnerable banks – none in Britain – increasing reserves by more than €100billion (£87billion). However a decision is still awaited on this weeks’ demand that private investors, mainly banks, absorb up to a 60% write-off of their loans to Greece.
How these goals would be achieved was given little explanation – details are set to be thrashed out during further talks this Saturday and a final decision is not expected until November. Nevertheless Martin Callanan MEP, leader of the Conservatives in Europe, believes these crisis-talks “[have not] worked as none have addressed the fundamental problem… the yawning gap between the economic viability of Greece and Germany.”