Italy and Spain to get further European support
Struggling economies strike summit deal to bring down borrowing costs without stringent austerity measures.
European leaders have agreed to act to bring down the yields on Italian and Spanish government debt without the need for major budget cuts.
At the crunch EU summit in Brussels, Italian prime minister Mario Monti (pictured) and Spanish prime minister Mariano Rajoy had previously rejected a growth package proposed by other EU leaders, instead demanding action to bring down their governments’ cost of borrowing.
Spanish 10-year government bond yields have fallen slightly to 6.89 per cent this morning, from more than 7 per cent before the summit, while Italy’s equivalent debt was yielding 6.2 per cent.
As well as the debt deal EU leaders agreed to centralise banking supervision in the eurozone, part of an agreement which will also see bank bailouts funded by the eurozone countries not added to the budget deficit of the bank’s home country.