Eurozone finance ministers meet to increase rescue fund

Finance ministers from across the Eurozone are today meeting in Brussels to discuss measures to tackle the EU’s still rising debt crisis.

In spite of many EU member states introducing austerity measures to deal with spiralling imbalances, the size of the total rescue package set down for bailouts is being questioned, with an increase on the agenda for today’s discussions. Fears that Belgium, in addition to Portugal, Spain and Italy, may need assistance are causing a new nervousness amongst investors.

The main concern for finance ministers is that, should Portugal finally be forced to apply for a handout, the rescue fund will not contain enough ready cash to support Spain and Italy should this become necessary. Portugal’s austerity measures have helped stave off a bailout for now, and the careful introduction of Spain’s austerity budget last May meant its avoidance of sustained social unrest, although its unpopularity may result in destabilising early elections.

Ireland, the second EU state to receive a bailout, introduced a particularly tough December cuts package, accepted with resignation by its population, with property prices, already in the doldrums, continuing to fall as a result. The worst hit are poorer families, with increases in unemployment and benefit cuts taking their toll.

Vultures have been circling over Belgium recently, slating the lack of a government for seven months amid continuing political deadlock as one reason for the state’s massive debt problem. Standing at 97.2 per cent of GDP, there seems no hope it can be addressed at present. Caretaker PM Yves Leterme, has promised austerity measures by February with cuts across the board, but investors feel a total restructuring is in order.

The Greek government seems to be on a minor winning streak, with strikes and protests diminishing, although more austerity measures due to be introduced this year are unlikely to be well received. Italy’s sluggish growth, massive corruption and huge debt, not to mention its comedy act of a prime minister, is another matter, as the country is the EU’s third largest economy. Cuts of around €24 billion were introduced and sales to emerging markets are a positive factor.