EU agrees incomplete financial package

European Union leaders wrapped up a two-day summit by approving a “grand bargain” of measures they argued would make them better able to tackle the eurozone debt crisis – and just in the nick of time.
Several leaders argued that with the Portuguese government on the brink of collapse after failing to pass its austerity programme, the EU now has the tools it needs to manage an assault by the sovereign bond markets and any fallout from the political crisis in Lisbon. “It’s fortunate for Portugal we have put together all the resources that we now have,” said Fredrik Reinfeldt, Sweden’s prime minister.

But after months of negotiations, the deal struck by European leaders leaves the bloc with much the same powers to deal with Portugal – and any other debt-laden eurozone member caught up in any contagion – that it did a year ago.
“It is abundantly clear now that EU leaders have missed the biggest opportunity they have had to get ahead of the crisis,” said Sony Kapoor, an economic consultant.
EU leaders did agree to give the eurozone’s €440bn ($619bn) bail-out fund more firepower, promising to increase its lending capacity to its full €440bn. Currently, because of the need to hold cash back when a rescue is initiated, it can only lend about €250bn.

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