Saturday, November 26, 2011

Rumours abound

Eurozone leaders were last night looking again to the International Monetary Fund (IMF) to help countries in distress as bond yields in Italy and Spain hit new highs and the credit-ratings agency Standard & Poor's (S&P) downgraded Belgium.

Meeting in Berlin, the finance ministers of Germany, Finland and the Netherlands even hinted at the prospect of an enhanced role for the European Central Bank (ECB) if all other steps to save the euro collapsed. But they again ruled it out as an immediate solution.

Their talks, ahead of Tuesday's meeting of the 17-member Eurogroup in Brussels, came amid reports that Spain's new centre-right government might soon apply for aid from both the IMF and the European Union's main bailout fund, the European financial stability facility (EFSF). Spanish state borrowing costs earlier leaped to the dangerously high level of 6.7%.

However, senior Partido Popular sources said reports that the Rajoy administration – not yet officially installed – would seek external aid were false. "The party absolutely denies this," a spokeswoman said.

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