EUROPEAN finance ministers last night fell short of their target to raise a €200bn fund to help the IMF tackle the debt crisis.
The euro was down against the dollar for the first time in three days after ministers missed their own self-imposed deadline to raise the fund.
The IMF funding scheme was a key plank of the agreement reached at last week's European leaders' summit. Such an obvious failure coming so soon after the event is sure to rattle markets further.
Brian Barry, an analyst at Evolution Securities, said disappointment would be high because leaders had set a relatively modest target for the IMF scheme.
But he said the sums involved were substantial and would help cope with debt-raising for Italy and Spain early next year.
European leaders plan to lend the money raised to the IMF, which in turn will lend it back to the eurozone to help tackle the debt crisis.
The scheme was announced following a meeting of European heads of government on December 8 and 9. It gets around legal barriers against the eurozone handing direct aid to countries.
However, the scheme fell short yesterday after the UK refused to deliver €30bn it was expected to contribute.
UK Chancellor George Osborne said he would not pay into a fund that could only be used to help eurozone members. Mr Osborne added the UK would co-ordinate help for the IMF with other members of the G20 economies.
Sweden also failed to sign up yesterday. It will look at the proposal in more detail before lending into the fund.
Yesterday, finance ministers from all 27 European Union member states held a three-hour conference call to discuss the issue as well as technical details of the planned permanent European bailout fund.
Ministers from the 14 eurozone countries not in bailout deals agreed to make contributions totalling €150bn to the fund. A spokesman for the Department of Finance said Ireland and other bailout countries were not asked to help out, rejecting reports that Michael Noonan was asked to contribute.
The UK refusal came after that country was left isolated by other European leaders for refusing to sign up to a new treaty at the December 9 summit.
The UK remains one of the major European economies, however, and yesterday was able to flex its financial muscles. It will embarrass eurozone leaders and leaves the relatively modest fundraising efforts unfulfilled.