The Financial Times has released details of a surprise breakthrough in negotiations surrounding the Eurozone's debt crisis
A deal has been reached between the Eurozone's 17 governments in order to prevent further deterioration in the Eurozone's finances.
Some of the key points are laid out below: -
- the leaders of the 17 governments agreed to give more financial backing to the 440bn euro rescue fund
- they also agreed to a plan to buy sovereign bonds from struggling governments when they are initially auctioned, with one stipulation "they must enter into a fiscal austerity program along similar lines to the bail-out terms laid out previously.
- this would allow participating governments the ability to finance their debt much lower interests rates in comparison to what they would get on the open markets.
The only part of the deal not agreed was a cut in interest payments been paid by the Irish government. The reason for this was because the newly elected Irish government refuse to cede ground on a hike in their corporate tax rate. This has been a been a major source of contention between the Irish on one side and France & Germany on the other. (see previous post earlier this week for details)
Although the total size of the fund is 440bn euros, in order to maintain funds AAA credit rating it can only lend out 250bn of the 440bn euros.
On a positive end note Herman van Rompuy said "everything will come together at the European Council at the end of March". Adding "this should finally allow us to turn a corner".