THE EUROPEAN CENTRAL BANK was on the verge of activating a bailout mechanism to help Ireland cope with its growing mountain of national debt, according to a German newspaper.

In an article entitled “The next rescue, please!”, Germany’s leading financial daily Handelsblatt quoted an internal government source which indicated that Eurozone countries were told to borrow money on the Irish government’s behalf, as the yield of Irish government debt reached new all-time records last week.

Last week’s record for 8-year yields, of 6.198%, was touching the levels hit by Greek bonds before the ECB and the International Monetary Fund stepped in to agree specialised lending packages for the Hellenic republic.

The ECB did, however, decide against activating the plan at the last moment, it said, though a discussion on the rescue mechanisms for failed states will be held at the next meeting of the EU Council at the end of October.

That meeting, involving the heads of all 27 member states and led by full-time president Herman Van Rompuy, may discuss “a new framework for the financial support of Euro countries whose access to private credit is difficulte, to be developed as a permanent installation similar to the current stabilisation fund,” Handelsblatt said.

The article also quoted the governor of the Austrian central bank, Ewald Nowotny, who said he agreed with the line of his German counterpart Axel Weber that such a deal would be introduced for about three years.

News of the article has seen the cost of 10-year borrowing rise yet again, reaching 6.57% at 1pm – just short of the all-time record of 6.576% achieved on Friday before bonds rallied to close tat 6.47%.

The price of eight-year borrowing has reached a new all-time record, meanwhile, of 6.238% as of 1:30pm. Four-year bonds are also trading at a record high, of 5.124%.