• Following talks in Paris today, German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a course of action they believe could save the euro.
In a joint press release the two leaders said that EU treaty changes will include automatic sanctions against eurozone members that exceed the budget deficit threshold of 3% of GNP. Bailing out countries by means of eurobonds has been ruled out due to lack of funds, it was said. Instead, Merkel and Sarkozy agreed to activate the European Stability Mechanism (ESM) to replace the current bailout facility - the 440-billion-euro European Financial Stabilisation Facility (EFSF), which was practically disboursed to bail out Greece, Ireland and Portugal.
Initially aimed to take effect in 2013, the ESM treaty is a permanent bailout fund agreed by member states last July. Its Board of Governors, comprising of Eurozone finance ministers bound by, and accountable to the treaty, will have the power to raise an initial €700 billion from eurozone members, pro rata, and to demand for more if required.
"This is ludicrous," UKIP MEP and spokeman for economic affairs, Godfrey Bloom said in response. "They admit there is not enough money to bail out distressed countries through eurobonds, but they want to try the same thing through the same states financing the ESM.
"I have news for Merkel and Sarkozy - Italy and Spain are too big to bail.
"The markets may have a blip for a few days, but when people realise there is still not enough money and these ideas won't work, the euro is still going down, " Bloom said.
UKIP leader Nigel Farage said:
"If all member states are to implement treaty changes, then David Cameron must give the people of the UK the referendum he promised. Failure to do so will see not only a Tory backbench revolt, but a rebellion at the ballot box.
"Implementation by just the eurozone countries would see Britain being left impotent as an inner core of EU states is created.
"The Prime Minister must use this opportunity to finally let the people of the country have their say on the UK's future membership of the EU."