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EU leaders strike 'comprehensive' debt deal after hours of talks

Greek debt will be written down by 50 per cent, with the EU bailout fund boosted to around €1trillion.

Enda Kenny speaks with Angela Merkel and UK PM David Cameron at last night's talks
Enda Kenny speaks with Angela Merkel and UK PM David Cameron at last night's talks
Image: Geert Vanden Wijngaert/AP/Press Association Images

TAOISEACH ENDA KENNY has welcomed a wide-ranging deal on the debt crisis reached by EU leaders in the early hours of this morning.

The deal, reached after hours of wrangling between politicians, EU officials and financial representatives, will see Greek debt written down by 50 per cent.

Meanwhile, the European Financial Stability Fund to help countries in need will be increased to around €1trillion, and banks will be recapitalised to improve their ability to withstand shocks. However, it’s understood Irish banks will not require further capitalisation.

Enda Kenny said the deal “allows for a much improved environment in the Eurozone, and there for a much improved environment for Ireland to do its business.  This presents us with increased opportunities for jobs, job creation, and getting people back to work.”

Speaking to RTÉ News, he added that the deal had recognised the “progress” Ireland had made in coping with our own debt.

European Council president Herman Van Rompuy said: “This comprehensive package does what it takes to ensure financial stability.”

The agreement on Greece will see the country’s burden reduced,with private sector creditors taking a ‘voluntary’ 50 per cent cut on their investments – a reduction of around €100billion. In return, banks will receive around €30billion in credit enhancements, Reuters reports.

The EFSF will be increased by leveraging its remaining reserves. The Telegraph reports that the fund currently holds around €290billion after being used to help bail out Ireland, Greece and Portugal. Around €250billion of that would be leveraged four or five times to give the €1trillion figure.

Eurozone leaders welcomed the deal as they emerged from talks in Brussels in the early hours of this morning. French president Nicolas Sarkozy told reporters “The eurozone has adopted a credible and ambitious response to the debt crisis”, the BBC reports.

German chancellor Angela Merkel said: “I think we were able to meet expectations and we have done what needed doing.”

Read more: EU leaders approve banking bailout plan, while Greek talks continue>

Read more: Italian government – and Eurozone – on the brink over debt deal>

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Michael Freeman

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