G20 split emerges over rescue plan for Italy and Spain

Julian Harris
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DIVISIONS emerged at the G20 summit in Mexico last night over plans for Europe’s bailout funds to snap up the debt of member states such as Italy and Spain.

European officials briefed that a consensus had been reached on the need to cut borrowing costs of troubled Eurozone governments, leading to reports that even German Chancellor Angela Merkel had shifted her stance.

But German representatives were quick to shoot down the idea. “There was no discussion here in Los Cabos about any concrete initiatives [related to cutting costs],” an official said.

A G20 draft communique had said euro leaders would “take all necessary measures to safeguard the integrity and stability of the area”, with Italy pushing for more debt buying.

Italian PM Mario Monti wants the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) to be able to buy bonds in the both primary and secondary markets.

The ESM does not yet exist, with the majority of Eurozone member parliaments still to ratify the rescue scheme.