(FT) -- European heads of government vowed on Friday that the eurozone's bail-out fund would always have enough financial wherewithal to rescue any faltering country, but the leaders stopped short of saying they would increase its size.
The promise, contained in their summit communiqué after two days of meetings, was the most explicit commitment to date by European Union leaders about their willingness to back a bail-out of even larger eurozone economies such as Spain and Italy, should those countries get cut off from the financial markets.
But their unwillingness to enlarge the fund, which had been proposed by some EU finance ministers, was a sign that they believed setting a new, higher limit would only lead bond traders to assume EU leaders believed a Spanish or Italian bail-out was inevitable.
The commitment came on the same day Moody's cut Ireland's credit rating five levels and said the outlook for Irish debt was "negative". The downgrade was expected following last month's €85 billion ($112 billion) Irish bail-out, but the severity of cut was more than anticipated.
At the summit, Nicolas Sarkozy, the French president, called the downgrade "surprising" but used the opportunity to yet again criticize Dublin for maintaining low corporate taxes as Ireland struggled to cut debt drastically as part of the bail-out deal.
European leaders assiduously avoided discussions on the next steps they would take to tackle the crisis at the summit. Despite criticisms that the EU needed to take quick, system-wide action, officials said a summit debate over economic issues largely focused on Portugal and Spain's austerity measures.
But Jean-Claude Trichet, the European Central Bank president who has been one of the most vocal advocates for more aggressive EU action, used the Thursday evening discussion to scold leaders for their handling of the crisis and prod them into a more determined response that would calm financial markets.
According to people briefed on the debate, Mr Trichet distributed a chart showing how the cost of insuring against default on EU debt had soared after the last summit meeting at the end of October, where eurozone leaders spooked financial markets by raising the prospect of private investors being hit harder in future EU bail-outs. CNN
