Debt Crisis: Markets on edge after overnight deal
EUROPEAN leaders have begun further talks today in Brussels following an historic night when some agreement was reached on ways of fixing the eurozone debt crisis but Britain and Hungary exercised a veto in a vote on changes to the EU treaties.
It is understood that Hungary has since changed its tack and the decision on treaty changes will go back to Parliament in Budapest instead leaving Britain somewhat in limbo.
Stock markets remain edgy today as the talks continue with the FTSE 100 and Germany's DAX flat having fallen slightly earlier.
While a full agreement from the European Union 27-member states on treaty changes remains a thorny issue, there were some deals were done on fiscal rules.
And as part of the ongoing negotiations,Taoiseach Enda Kenny is demanding a reduction on our €63bn in banking debt as part of an agreement on tough new rules for euro membership, which could be put to a referendum in Ireland.
The reduction, of between €15bn and €20bn, focuses mainly on debt that is still owed in relation to the former Anglo Irish Bank.
This debt is €31bn and large annual payments of €3bn per annum kick in in 2013 and reductions would be achieved through extending the payment timeframe and reducing the interest rates due.
Entering discussions this morning, German Chancellor Angela Merkel, who is heading up the talks with French Prime Minister Nicolas Sarkozy, said: "We made important decisions for the euro yesterday.
"It was about starting the fiscal and stability union. We have made good progress, especially with regards to the debt brake for all states that will be part of this new treaty and more automatic sanctions."
What was agreed between the 17 eurozone states, and most of the EU 27, were a number of measures to tackle the debts of countries in the continents.
They include rules that eurozone member state budgets should either be balanced or in surplus and automatic sanctions if member states break the 3pc of Gross Domestic Product (productivity) rule.
EU countries have also bilateral loans to the International Monetary Fund to tackle the debt while the European Stability Mechanism, the permanent rescue fund which is due to come into effect next year, will be capped at €500bn.
Meanwhile, the European Central Bank has limited the maximum purchase of eurozone sovereign bonds to €20bn a week, according to news agency Reuters.
It is understood the decision was taken following the agreement on fiscal rules made in Brussels overnight - the stricter budget limitations are in line with ECB policy.