EU agrees on eurozone rescue fund

The German chancellor (left) does not want to pour more euros into the current EU rescue fund

EU leaders have agreed to set up a permanent mechanism to bail out any member state whose debt problems threaten the 16-nation eurozone.

The eurozone stability mechanism will require a change to the EU’s Lisbon Treaty – but the wording has now been agreed, diplomats say.

As the UK uses the pound it will not have to contribute to the fund, UK Prime Minister David Cameron has said.

This year Greece and the Irish Republic have received emergency EU bail-outs.

The 27 leaders, meeting in Brussels on Thursday, agreed that in 2013 the permanent mechanism would succeed the eurozone’s 750bn-euro (£637bn; $1tn) temporary bail-out fund, the European Financial Stability Facility (EFSF).

The agreement says “member states whose currency is the euro may establish a stability mechanism, to be activated if indispensable to safeguard the stability of the euro as a whole”.

But any eurozone country requiring such an injection of emergency aid must act to tackle its debt or deficit, the statement adds.

“The granting of any required financial assistance under the mechanism will be made subject to strict conditionality,” the text says.

Diplomats said the agreed wording – two sentences – would be inserted into the Lisbon Treaty.

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