EU leaders hope to reach debt crisis plan

EU leaders are meeting at an emergency summit in Brussels to try to finalise plans to tackle the Eurozone debt crisis.

There is growing speculation that a comprehensive deal may not be agreed, with German Chancellor Angela Merkel facing a vote in parliament on increasing the bailout fund’s firepower without involving more German taxpayers’ money. In Italy, Prime Minister Silvio Berlusconi is reported to have reached a last-minute limited deal on economic reforms.

There are worries that the Greek debt crisis could spread to the larger economies of Spain and Italy; Euro exchange rates in particular are likely to be volatile and sensitive to developments this week. We would expect a stronger Euro (lower exchange rates for sending Euros) if there is a consensus and announcement of a cohesive rescue plan.