Eurozone finance ministers have agreed to expand Europe's bailout reserves, to what the head of the Organisation for Economic Co-operation and Development (OECD), Angel Gurria described as "the mother of all firewalls".
The ministers, meeting at the Copenhagen summit, have decided to boost the joint lending power of the "firewall" from 500bn to 800bn euros. The firewall is the permanent mechanism to bail out troubled eurozone nations.
As Spain and Italy's finances have looked more precarious, investors have been worried about whether the eurozone's firewall could cope with more bailouts and wanted the fund to increase from its current size of about 500bn euros to closer to one trillion euros. But there was resistance from Germany to an increase of that scale.
The combined lending of the two funds - the existing European Financial Stability Facility (EFSF) (which has already been used to rescue the Republic of Ireland and Portugal, and is committed to providing part of Greece's second bailout) and the European Stability Mechanism (ESM) (which was originally intended to be a permanent replacement for the EFSF, but which will now overlap with it from the middle of this year) - will be set at a total of 700bn euros. Including two other loans already made to Greece, the eurozone said the firewall is now above 800bn euros.
Serious concerns have been raised over Spain, which has failed to cut its borrowing as much as promised, and which yesterday faced a general strike and violent protests against labour reforms intended to boost its flagging economy.
(pictured: Prime Minister of Luxembourg and President of the Euro Group, Jean-Claude Juncker, with Austrian finance minister, Maria Fekter at the Copenhagen summit)