Angela Merkel, Germany’s chancellor, for the first time publicly confirmed yesterday that her government will back plans for an increase in the eurozone’s financial “firewall” to at least €700bn, including the €200bn already committed to Greece, Ireland and Portugal.
But the German concession falls short of the preferred solution proposed by the European Commission, the European Union’s executive branch, for a near-doubling to €940bn by combining the full resources of the eurozone’s current, temporary rescue fund with a new, permanent facility due to start in the summer.
Senior eurozone officials said Berlin remained open to a temporary increase to €940bn by allowing the entire existing rescue fund, the €440bn European Financial Stability Facility, to continue running for a year when the new €500bn fund, the European Stability Mechanism, starts in July. German officials privately left the door open to such a plan, considered an acceptable middle path by the European Commission.