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We're borrowing a further €3.5bn

IRELAND will borrow an additional €3.5bn from the eurozone bailout fund as reports emerge that senior European leaders are investigating an overhaul of the fund.

It is believed negotiations are under way for new austerity measures and closer surveillance in return for changes in the terms of the €440bn rescue fund.

Leaders are considering "enhanced surveillance" of Spain and Portugal rather than assistance, which would give a European Union stamp of approval on proposed reforms, sources have said.

Separately, Greece is in talks with the European Union and International Monetary Fund on a debt restructuring package aimed at averting a possible sovereign default.

John Lipsky, the leading US official at the International Monetary Fund, also told the Financial Times that the loans to Greece and Ireland had "no guarantee of success" and that restructuring of debt would not be without cost. He described the cases of Greece and Ireland as extremely difficult.