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'Progress made at EU summit'


Prime Minister David Cameron said good progress had been made at the eurozone crisis talks (AP)

Prime Minister David Cameron said good progress had been made at the eurozone crisis talks (AP)

Prime Minister David Cameron said good progress had been made at the eurozone crisis talks (AP)

David Cameron has said that "some good progress" had been made by EU leaders at an emergency summit towards agreeing a package of measures to resolve Europe's debt crisis.

The Prime Minister joined the other 26 EU leaders for urgent talks in Brussels amid mounting concerns about Europe's economic prospects - with German Chancellor Angela Merkel branding it the continent's worst crisis since the Second World War.

Emerging from the meeting - to be followed by talks between countries who use the single currency - Mr Cameron said particular progress had been made on moves to recapitalise banks which had "not been watered down" and was now agreed as part of a three-pronged strategy.

Before leaving Brussels, Mr Cameron said: "We made some good progress tonight. It's very much in Britain's interests that we sort out these problems and solve this crisis.

"We have made good progress on the bank recapitalisation; that wasn't watered down, it has now been agreed.

"It will only go ahead when the other parts of a full package go ahead and further progress on that needs to happen tonight."

Bank recapitalisation would only go ahead when all parts of the plan were agreed, he said, telling eurozone leaders further progress was needed overnight.

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Ahead of the summit, Mrs Merkel had raised the stakes by warning that peace in Europe could not be taken for granted. Speaking to the German Bundestag, she said Europe faced its toughest period since the Second World War.

"No-one should take for it for granted that there will be peace and affluence in Europe in the next half-century," she said.

"The world is watching Germany and Europe to see if we are ready and able to take responsibility. If the euro fails, Europe fails."

Summit conclusions from the 27-leader meeting confirmed approval of the first of three key accords - strengthening the liquidity of the most exposed banks in Europe.

The recapitalisation of Europe's vulnerable banks - none in the UK - involves increasing their reserves by more than €100bn (£87bn).

The extra is supposed to be raised via private investors, but if that is not possible the top-up may have to come from the EU's bailout fund - basically from eurozone governments using taxpayers' cash once more.

The problem with the recapitalisation figure is that experts are estimating that it is not enough. They say half as much again will be required to shore up banks sufficiently to satisfy markets.

The deal on recapitalisation remains subject to final agreement on the other two parts of the economic package being thrashed out by the leaders - a much bigger bailout fund for the eurozone and a writing-off.

With the departure of the 10 non-eurozone leaders, the remaining 17 were settling in for a night of negotiations on the financial mechanism which will be needed to reach the target figures the EU hopes will calm market fears.

Recapitalising Europe's banks means they will need to raise more money so that they hold just under 10% of their "assets" in cash. The total banks must raise is around €108bn. However, it is unclear if banks will be forced to rely on help from the European Financial Stability Fund.

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