Reuters reports that Germany is now seeking to channel remaining money available as part of EU structural aid funds into a separate fund to stimulate growth in struggling European sovereigns.
That report cites an anonymous source within the German government, who says that Germans will attempt to work this growth fund into the framework of 2014-2020 plans.
The new fund would help countries unable to finance new spending through the financial markets, in particular countries that have already received aid—Greece, Portugal, and Ireland. However, it would not support countries like Italy and Spain, which have not yet received bailout funds.
Thus, it would do little to reassure investors worried about the risk in Italian or Spanish debt, something that has been the prime concern to investors lately.
However, it could address concerns that the European Financial Stability Facility—and subsequently the permanent European Stability Mechanism—will be ineffective in truly containing the rising costs of sovereign borrowing for the primary PIG countries.
The details of such a plan remain unclear, however we could hear more about such a fund ahead of another EU summit on January 30.
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