Bailout fund not big enough, warns EU

EU leaders have warned the eurozone bailout fund is not large enough to cope with the European debt crisis.

José Manuel Barroso, the president of the European Commission, argues that the bailout fund needs to be boosted by about €200 billion (£166 billion) within the next three weeks.

Barroso also argues that the scope of the fund should be widened to include bond-buying and short-term credit for countries in distress.

Barroso’s remarks have put him at odds with French and German governments who have dismissed the proposals as unnecessary.

The €750 billion (£623 billion) fund was established by the EU and IMF in May 2010. €440 billion is guaranteed through the European Financial Stability Facility by the biggest contributors. (article continues below)

The calls for an increase come despite Portugal passing a crucial test in the bond market recently by raising €1.2 billion (£0.9 billion) at a rate of 6.72%, lower than its danger-zone threshold of 7%.

Commission officials warn that without action, market attacks on the weaker members of the euro would pose a considerable risk.