THE INTERNATIONAL MONETARY Fund (IMF) has issued a warning that Eurozone leaders meeting in Brussels tomorrow must reach a deal to end the region’s sovereign debt problems.

The IMF warned that the intensification of the crisis which has already forced Eurozone members Greece, Ireland and Portugal to accept an international bailout could have “major global consequences”.

Greece is likely to need a second bailout whilst there are fears over the debt problems in Spain and Italy. Ireland’s adherence to its bailout programme was given approval by the troika of the EU, IMF, and European Central Bank last week.

But in a report examining the possible “spillover” impact of more uncertainty in the euro, the IMF warned of the effects from the crisis spreading through the entire region, warning that it could cut growth by 2.5 per cent while projected global growth would fall by around 1 per cent over the rest of this year and next.

Despite the warning, the IMF described the eurozone recovery as “broadly sound” although noted that growth “remains uneven and moderate”.

EU officials will meet in Belgium tomorrow to try and flesh out a package of measures for a second bailout of Greece with worries that the debt crisis there could spread to Spain and Italy which last week passed unprecedented austerity measures in a bid to stave off economic crisis.

The German chancellor Angela Merkel has previously warned she may not attend the summit unless a deal is in place. She has insisted that private investors must share the burden of alleviating Greece’s financial problems. More recently she has warned that the summit is  unlikely to herald a big fix that could solve the crisis.

However the Telegraph reports that diplomats in Brussels are warning that unless there is a deal “more or less” sealed “bedlam” could ensue in the markets on Thursday.

Bloomberg adds that Merkel will meet with French president Nicolas Sarkozy in Berlin today to attempt to find common ground on which to address the crisis.

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