Jean Claude Juncker, the head of the Eurogroup, said all 27 European Union finance ministers, including George Osborne, would talk together tomorrow afternoon to approve or reject extending the funds to the IMF as agreed in Brussels by December 19. The loans would be used by the IMF to support struggling eurozone countries.
The finance ministers are also tasked with devising a voting system to govern the European Stability Mechanism (ESM) after the Brussels decision to replace unanimity sparked a revolt. The ministers are under pressure to have a deal ready for approval by EU leaders when they convene on Tuesday.
There are fears that a failure to reach an agreement on either the IMF loans or the ESM would rattle markets which already have to digest the mass credit rating downgrade warnings on eurozone sovereigns that were announced on Friday night.
Fitch placed six countries, including Spain and Italy, on “negative watch”, while Moody’s downgraded Belgium. Standard & Poor’s has said 15 eurozone states face a downgrade, including France and Germany.
Mariano Rajoy is due to make his first speech to the Spanish parliament, setting out his long-awaited austerity plans. The new prime minister has hardly made any public announcements on Spain’s economic future since he was swept to power last month.
Mr Rajoy will be sworn in as prime minister on Wednesday when he will also name his cabinet, including his finance minister. The cabinet will meet for the first time on Friday. Although the yield’s on Spain’s 10-year debt dropped at the end of last week, the country faces an even tougher time on the bond market after Fitch’s warning.
Separately, Jurgen Stark said he decided to quit as senior economist at the European Central Bank (ECB) because he disagreed with its bond-buying policy.
The Telegraph
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