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EU leaders reach euro agreement

Ten hours of discussions resulted in ‘ambitious’ measures, including writing off half of the Greek debt

WRITING off half of the Greek debt and reinforcing the European Financial Stability Facility (EFSF) were the main decisions taken at last night’s summit to save the euro.

At nearly 4.00, after 10 hours of discussions, what President Sarkozy has called a “comprehensive response, an ambitious response, a credible response”, is said to have been reached.

Banks and private investment funds with claims on Greek debt have agreed to renounce half of their entitlement from now until 2010, amounting to €100 billion off a total public debt of €350 billion.

Coupled with contributions from the European states of €130 billion in loans, this is expected to bring the Greek debt to 120% of its GDP by 2020, compared to 160%.

The EFSF, the main euro crisis bailout fund, financed by member states, is being increased to €1 trillion euros from €440 billion.

Among other aspects, it was agreed Eurozone summits will be held twice a year, presided by the EU president Herman Van Rompuy.

EU states are also meant to enact new laws, by the end of next year, standardising rules on balancing budgets, aimed at stability and growth.

The announcement that an agreement had been reached saw the Paris stock market rise this morning, by 2.43%.

President Sarkozy will appear live on France 2 and TF1 tonight answering questions about the decisions, from 20.15.

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