17 Dec 2010

EU leaders agree to a eurozone rescue fund

1:25 pm on 17 December 2010

European Union leaders have agreed to set up a permanent safety net to bail out any member state whose debt problems threaten the 16-nation eurozone.

Greece and the Irish Republic have received emergency EU bail-outs this year, the BBC reports.

The new mechanism will, from 2013, succeed the eurozone's 750 billion euro temporary bail-out fund that was agreed in May.

Any country tapping the fund must also tackle its debt or deficit.

The agreement comes as Spain raised just under 2.5 billion euros on the bond market, but at heavy cost, paying twice as much interest as Germany would have.

Meanwhile, rating agency Moody's has warned it may again downgrade Greece's credit rating over concerns about the country's ability to cut debt to sustainable levels