The two-day EU summit in Brussels is being seen as a political victory for the leaders of Italy and Spain over their German counterpart.
Italian prime minister Mario Monti pushed especially hard for German chancellor Angela Merkel to finally accept emergency measures she had been
resisting as the bloc struggles to deal with the eurozone debt crisis.
“All the people who are part of the euro, wanted this currency voluntarily, we want it to continue. We want more integration, we want fiscal integration, we want more integration between banks, that is what we talked about,” said Spanish prime minister Mariano Rajoy.
Spain will benefit from the decision to allow the European Stability Mechanism to recapitalise banks – making it a eurozone burden rather than one felt only by the Spanish government.
The decision to allow intervention in bond markets will help Spain and Italy who have been facing increasingly high borrowing costs.
Referring to both these measures, European Central Bank president Mario Draghi said: “Of course both these things have to be accompanied by strong conditionality otherwise they’re not credible and they will not achieve results for which they’re being created.”
Decisive action and tangible results from the summit produced an immediate effect. With the announcement of the two measures, investor confidence rose and across Europe the main markets were buoyed, closing sharply higher thanks to what is being seen as robust action in trying to tackle the debt crisis.