Last-gasp effort to prevent economic woes spiraling
Prime ministers, chancellors and presidents across Europe are locked in emergency talks in a final bid to resolve the bloc’s sovereign debt crisis.
A summit in Brussles on Wednesday has been marked as the last deadline for Eurozone nations to agree on a broad package of measures to prevent the EU crisis from deepening and precipitating another global economic slump.
On Monday, European markets held steady as bankers, businesses and stock markets hope on Euro bosses to seal a deal.
An emergency meeting of Europe’s leaders was held over the weekend and, though no conclusive deal was made, a framework agreement was reached.
In further progress:
* Eurozone leaders agreed in principal to force banks to protect themselves against future losses. Banks must raise more than £87 billion in new capital.
* The European Financial Stability Facility (EFSF) – essentially Europe’s bailout pool – was agreed needs further investment beyond its 440 billion.
* Germany and France have asked Italy to take further austerity measures to reduce its huge debt. German chancellor Angela Merkel and France president Nicolas Sarkozy held talks with Italy PM Silvio Berlusconi.
However, negotiations with banks continue to jam on the issue of accepting certain losses on Greece debts. Politicians have asked lenders to write off more than 50 per cent on their Greek debt holdings, after the banks originally proposed 21 per cent.
The IMF is calling on banks to accept a 60 per cent loss, but bankers claim that anything over 40 per cent would in itself trigger another credit problem within the banking infrastructure.
Meanwhile, UK prime minister David Cameron is facing one of the biggest back-bench rebellions since becoming the Conservative leader. Euro-sceptic MPs are demanding a referendum on the UK leaving the EU altogether.
The Tories will impose a three-line whip – the strictest warning it has – to any MP that votes for a referendum on Britain leaving the EU.