Rajoy: A bigger bailout pot will cost donors less

Tim Wallace
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THE MORE money is put into the Eurozone bailout fund, the less it will be used, Spanish Prime Minister Mariano Rajoy said yesterday, arguing that the larger safety net would calm markets and so make it less likely that countries will need to fall back on it.

He met German Chancellor Angela Merkel in Berlin yesterday, where both stressed the need to make the European Stability Mechanism (ESM) operational as soon as possible.

Rajoy also called for more immediate assistance, suggesting Spain’s over-20 per cent unemployment rate merited additional support, potentially from unspent money in the centrally allocated EU structural funds.

Such a plan appeared to be welcomed by Merkel, who said Germany is prepared to be flexible on the allocation of EU funds when looking to promote economic growth.

She repeated her praise of Rajoy’s austerity plans – though the Spanish government remains concerned that its declining economy means it will fail to hit deficit reduction targets.

Meanwhile European Council President Herman van Rompuy wrote to invite leaders to next week’s summit, saying “we need to take active measures to enhance growth and competitiveness and above all create jobs.”