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EU agrees on permanent eurozone rescue mechanism

EU leaders have agreed to set up a permanent bail out mechanism to help member states with debt problems that threaten the 16 countries in the eurozone.

According to the BBC, the new mechanism will mean a change to the Lisbon Treaty, however EU president Herman Van Rompuy said that the leaders were ready to do whatever was required to protect the currency.

The 27 leaders met in Brussels on Thursday to agree the mechanism which will succeed the eurozone’s 750bn euro European Financial Stability Facility, its temporary bail out fund.

Both Greece and the Irish Republic have already received emergency bailouts.

The agreement states that “member states whose currency is the euro may establish a stability mechanism, to be activated if indispensable to safeguard the stability of the euro as a whole”.

Any country looking for emergency aid must take measures to tackle its debt or deficit.

EU officials say the changes to the Lisbon Treaty would be a simplified procedure. The UK will not have to contribute to the fund as it uses the pound, UK Prime Minister David Cameron has said.

The summit comes amid continuing concern about stability in the eurozone, as national debts and deficits have soared above the EU’s targets.

Portugal and Spain have been under financial market scrutiny since the Irish Republic was forced to take an aid package of 85bn euros in November.

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