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Eurozone Finance Chiefs Fall Short on Bailout Fund

European Debt to GDP Ratio

European Debt to GDP Ratio

European finance ministers have failed to raise $261 billion to help contain the continent's governmental debt crisis.

Finance chiefs from the 17 nations that use the euro agreed Monday to raise $195 billion from eurozone central banks to help the International Monetary Fund boost its European assistance. In a conference call, however, the finance ministers were unable to secure the rest of the money from European Union countries with separate currencies.

Leading the opposition, Britain said it would not contribute to any IMF fund that was only available to the eurozone nations. Britain was the lone dissenter in a continent-wide agreement earlier this month to impose tighter budget controls on individual governments.

Four other European countries outside the eurozone - Denmark, Poland, the Czech Republic and Sweden - agreed to contribute.

IMF money may be needed

The IMF money could be needed to help rescue Italy and Spain, the eurozone's third and fourth largest economies, respectively, if either defaults on its debts.

Despite the latest setback, European Central Bank President Mario Draghi said Europe will not abandon the euro.

"I have no doubt whatsoever about the strength of the euro, about its permanence, about its irreversibility. Let's not forget, this was a key word at the time of the Maastricht treaty. The one currency is irreversible," said Draghi.

The eurozone finance leaders also worked on details of the fiscal compact to control deficit spending they agreed to earlier this month, a pact supported by nine other European Union nations that have separate currencies, but not Britain.

Detailing deficit spending

The UN Conference on Trade and Development, in a new report, underscored Europe's economic plight. It said the continent faces a full-fledged recession next year and prospects for the world economy are bleak. The UN agency said world leaders need to stimulate economic growth, but instead are choosing austerity measures that raise the chance of a global recession.

Financial markets initially welcomed the European debt crisis agreement. But since then they have grown skeptical that IMF funding will be large enough to handle a new bailout crisis that could be much larger than those already faced by Greece, Ireland and Portugal.

In Madrid, Spain's next prime minister, Mariano Rajoy, vowed to trim the government's deficit by more than $21 billion in 2012. Rajoy, slated to assume office this week, detailed a variety of austerity measures in a speech to Parliament.

Rajoy warned that hard times lay ahead for Spain, though, with its unemployment rate at a staggering 23 percent. He said the "panorama could not be more somber."

Some information for this report was provided by AP, AFP and Reuters.