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European debt crisis: Germany approves eurozone rescue package – Live

• German MPs vote in favour of extending the powers of the European financial stability facility
523 MPs back the plan, with 85 against and 3 abstentions
• German finance minister warns Europe faces an “extraordinary difficult situation”.
• Nick Clegg to warn: EU could break up
• Today’s agenda
• Have your say in the comments below

11.57am: Here’s a great picture from the Bundestag, of Angela Merkel literally surrounded by supporters as the vote took place.

We’re hearing that 315 members of the coalition voted in favour. The magic number was 311 – the amount of support Merkel needed to win the vote without a helping hand from the opposition.

So, a triumph for Angela? She certainly looks happier than at the start of the debate.

11.45am: Kathrin Vogler, also from the Left party, has explained that she opposed the EFSF expansion because, in her view, it damages the European union and helps the banks at the expense of EU citizens.

Vogler told the Bundestag that she voted against the EFSF bill despite describing herself as a “staunch European” who lives near the Dutch border. She labelled the EFSF “unsocial, economically counterproductive and a further step towards the split of Europe”.

She also said the conditions imposed on Greece were “counterproductive” and would lead to a further weakening of its economy, with Greek unions fearing an unemployment rate of 26%. “The EFSF is a bailout fund for the banks, not for the people,” she concluded.

After the vote concluded, most MPs left the chamber – leaving the Left party to deliver a series of speeches attacking the EFSF expansion, to enthusiastic applause from their own ranks.

11.38am: In the City, the German “Yes” vote had little impact, with the FTSE 100 is now down 20 points (or 0.4%) at 5195. The German Dax is performing better, up around 0.5%.

Louise Cooper of BGC Partners believes the first “green shoots” of a workable solution to the Eurozone fiscal crisis may now be appearing. But she too agrees that the EFSF will need to be reworked quickly if Europe is to really get a grip on the crisis:

As expected the German parliament has voted through the EFSF this morning. However this is just a step in a very long journey to an unknown (as yet) destination.

Seven more countries need to vote on this and the Slovakia vote is not due until the end of October. The EFSF is now “so last season” – out of date already.

11.31am: The Open Europe think tank agrees that this is a “more comfortable majority for Merkel than many had expected” but cautions that we need to see the voting breakdown to understand the full story.

As we said at 11.22am It looks like more of the No votes came from the Left party (the former Communist party), which has 76 MPs.

11.27am: Sony Kapoor, managing director of the Re-Define economic think tank, is encouraged that the German government achieved such a large majority. However, he argues that much more needs to be done to fix the debt crisis.

Kappor argues that the EFSF’s terms will need to be changed again soon, so it can give direct support to Europe’s banks. He also said that German politicians must take some of the blame for the level of public opposition to expanding the EFSF:

The overwhelming majority in the Bundestag is a good sign and will hopefully mark a step change in German commitment to bringing the spiralling crisis under control.

Many of the sensible changes approved today had already been proposed last year were but unfortunately rejected. It’s good the Bundestag has approved these but it is too little too late.

The inability to aid troubled banks without first lending to the sovereign is seriously problematic as this may stop the EFSF from being able to support weak banks in weak member states, exactly the group that most need external support. This was necessary, but is far from sufficient. For things to improve, a whole host of things need to go right but even a single mis-step could worsen the crisis even more.

German leaders are directly responsible for how negatively the public feels about today’s vote on the EFSF. The cheap ‘lazy Greeks’ shots that seemed politically expedient last year have now come back to haunt them.

11.22am: Debate is continuing in the Bundestag, with MPs explaining their votes.

So far, only lawmakers from the opposition Left party have set out why they opposed the legislation.

Sevim Dagdalen says she voted against the EFSF deal. She accused the German government of pandering to banks, speculators, the “financial mafia”.

She added she sympathised with the Greeks who are protesting against their government’s harsh austerity measures, as well as the Portuguese. She attacked a “Europe that is unsocial and unfair”.

11.13am: Here’s the voting details:

In favour: 523 MPs
Against: 85
Abstentions: 3

So, a huge majority for Angela Merkel. We’ll get the full breakdown of who voted, and whether many of the coalition government rebelled, soon.

11.11am: Breaking news – the Bundestag has officially approved the expansion of the EFSF.

11.06am: Merkel needs a convincing majority to be credible.

If she gets more than 19 objections on her own side (i.e. the conservative CDU/CSU – Liberal FDP coalition), her coalition government could come under pressure to hold new elections.

10.59am: While German MPs vote, we can look quickly at Italy, which just paid a record high interest rate for its ten-year bonds.

In an auction this morning, Italy sold €6.9bn of sovereign debt, of varying maturity. The yield, or interest rate, on its ten-year bonds hit 5.86%, up from 5.22%.

That is the highest rate for Italian 10-year bonds since the euro was introduced. One economist described it as “eye-wateringly high”, but on the positive side, at least the auction wasn’t undersubscribed…..

10.52am: OK, the debate in the Bundestag has wound up…and voting in starting now.

It will probably take around 30 minutes for the votes to be counted.

10.45am: So much for German punctuality. We were expecting the EFSF vote at 10.30 London time, but a number of MPs have been having their say.

Norbert Barthle of the conservative CDU closed the debate in Germany’s Bundestag, asking parliamentarians to vote for the changes to the eurozone bailout fund “with a big majority’.

10.33am: Wolfgang Schäuble has also clashed with his predecessor as finance minister, the social democrat Peer Steinbrück.

My colleague David Gow says such disputes are inevitable, as Steinbrück will probably lead the SPD general election campaign in 2013.

But, David argues:

The political skirmishes overshadow the most salient fact: government and opposition accept that the EFSF will be inadequate and will require radical enhancement virtually as soon as it’s approved.

Schäuble last weekend denounced Tim Geithner, US treasury secretary, for demanding a huge increase in the EFSF’s €440bn firepower and he repeated this today: “It won’t be increased; there’s no question about that.”

BUT: very soon, he and Merkel will be preparing the way for expanding the guarantees or insurance the EFSF will offer for creditor countries and even talking about an EMF [a European version of the International Monetary Fund]

Everybody in German politics knows the current mechanisms are worse than useless if, say, Spain or Italy goes down the path towards default…

10.23am: Wolfgang Schäuble went on to warn that Europe is in an “extraordinarily difficult situation,” and that nervousness in financial markets could spread to the real economy.

Germany’s finance minister stressed that the country must remain “an anchor of stability in Europe”.

Turning to Greece, he reiterated that it will only get the next tranche of bailout money if conditions from the troika – the European Union, European Central Bank and International Monetary Fund – are met. A decision is expected on 13 October.

Carsten Schneider, of the opposition Social Democrats, welcomed the proposed changes to the EFSF, but said they came one year too late.

10.10am: More details from the Bundestag debate. Wolfgang Schäuble, Germany’s finance minister, has attempted to reassure MPs by saying any speculation about further changes to the EFSF is inappropriate. “Indecent”, in fact.

Schäuble told parliament:

We should not ask ourselves what is coming next and who intends this and that. That either increases insecurity or it is not serious and it is in truth even indecent.

Last weekend, reports broke that a €2trn rescue deal was being put together – including a major expansion of the EFSF. This has since been denied by several governments.

Amid many questions about whether there were plans to leverage the fund, Schäuble said the Bundestag was voting on whether to boost the German contribution to the eurozone bailout fund, and after that “we will see”.

“Therefore any speculation and [causing] insecurity is indecent,” he said.

Schäuble also promised lawmakers that all changes to the fund would have to be approved by parliament.

9.49am: The euro has been rallying in the currency markets this morning, gaining one and a half cents against the US dollar to .3677. It was as low as .3361 on Monday.

Jane Foley, senior currency strategist at Rabobank, warned that this recovery “appears to be built on shaky ground”:

It remains the case that this week’s rally in the Euro has been built largely on optimism rather than any concrete change in the Eurozone’s circumstances.

Headlines continue to make clear that Eurozone policy makers are a long way from finding consensus on issues surrounding the further development of the EFSF and the issue of more fiscal integration within the region.

Germany’s Finance Minister this morning has reiterated the line that Germany is ” taking seriously our responsibility to protect the EUR” but has also distanced himself from an inference that may have been drawn from previous remarks regarding the potential to leverage or expand the EFSF.

9.35am: Jürgen Trittin, head of the Green party faction in the Bundestag, has stressed that Germany must tackle weak demand – Europe’s biggest economy exports far more to its neighbours than it imports – to help overcome the eurozone crisis.

He also used the opportunity to attack Angela Merkel, saying her “zigzag course had worsened the crisis”.

9.25am: The EFSF expansion must be approved by national parliaments before it comes into law. Some have already given the green light (most recently Finland, on Wednesday). Austria votes on Friday, but some countries won’t give their verdict until next month.

This interactive (by my colleague Paddy Allen) shows the state of play.

9.22am: A quick reminder about what the German vote is all about. Under the rescue plan agreed on 21 July, the European financial stability facility (EFSF) will be expanded to €440bn. It will also be given the power to make ‘precautionary’ loans to eurozone companies who are struggling to borrow from the financial markets, and also buy up sovereign debt under certain circumstances.

In practice, this will increase Germany’s contribution to the bailout fund from €123bn to €211bn. Polling suggests that three-quarters of Germans oppose enlarging the EFSF.

9.02am: Rainer Brüderle went on to attack Peer Steinbrück, of the opposition Social Democrats (who spoke earlier in the debate) over his support for the introduction of eurobonds.

Eurobonds, Brüderle says, would make Germany responsible for debts in the rest of Europe – and lead to the “dispossession of large parts of the German population”.

Merkel has repeatedly reiterated her opposition to the introduction of eurobonds – despite the European Central Bank pushing for their introduction.

8.55am: Back in the Bundestag, Rainer Brüderle, leader of the FDP parliamentary group, the Liberals (part of Merkel’s coalition government), stresses the need to stabilise the eurozone. He says:

When money goes bad, everything goes bad. Germany experienced this in its history – from hyperinflation and mass poverty to war.

Before the debate, he told German radio that the centre-right coalition would not have to rely on opposition support to get the motion on the EFSF through. If so, that would be a significant boost to Merkel’s authority.

8.42am: While the debate continues in the Bundestag, my colleague Patrick Wintour has the inside line on Nick Clegg’s speech in Warsaw this afternoon.

The deputy MP (and former MEP) won’t be pulling many punches – warning Europe’s leaders that the European Union could be “torn apart” if the push for closer integration leaves Britain in the cold:

From Patrick:

Clegg will warn of serious implications if Britain’s role is downgraded by greater integration by eurozone countries.

He will say: “We cannot accept arrangements that would privilege the eurozone as a decision-making body over the European council. That is the surest way to rupture our union, undermining the huge strides that have been taken to secure cooperation between us, allowing walls to spring up even though we spent years knocking them down.

“The problem is if the economic crisis deepens the fault lines between our nations … if it tears us apart.”

8.37am: Peer Steinbrück of the opposition Social Democrat (SPD) party, a former German finance minister, has also harked back to the second world war in an effort to underline the importance of the vote to Germany.

Steinbrück reminded the Bundestag about the origins of the European Union after the war, and how the union has benefited Germany.

He says the changes to the EFSF are “necessary steps to stabilise the eurozone – but they won’t be enough”. Greece will need an economic aid programme to become more competitive, he adds later.

8.29am: Here’s a picture from the German parliament this morning

It shows economy minister Philipp Roesler and chancellor Angela Merkel waiting for the Bundestag debate to begin, looking stern and resolute.

8.20am: Volker Kauder, the head of Merkel’s conservative CDU/CSU parliamentary group, has opened the EFSF debate.

Kauder rejects suggestions that the bill on the expansion of the eurozone’s bailout fund, EFSF, has been rushed, saying everyone had a chance to make their voice heard. He stresses the importance of this vote, and even mentions the second world war to drum home his message that a peaceful, prosperous Europe is needed.

This is about more than expanding the EFSF. It’s about our future, jobs, perspectives for a young generation.

It’s not about Greece, payments to Greece, but creating a protective shield for those who need it, to prevent contagion… It’s in our German national interest.

8.09am: As forecast, shares have fallen back in early trading. The FTSE 100 dropped 40 points, or 0.7%, at the open – with all the major European indexes falling by a similar amount.

So, traders will probably be marking time while they await events in the Bundestag.

8.00am: The German debate is just starting.

The Bundestag looks certain to approve enhanced powers for the eurozone’s bailout fund on Thursday, but Angela Merkel’s credibility is at stake. Will she get a convincing majority within her own coalition of Christian Democrats and Liberals – or will she scrape through with the votes of the main opposition parties, the Social Democrats and Greens?

While most of Merkel’s own CDU party are toeing the party line, Horst Seehofer, the leader of its sister faction, the Bavarian CSU, is making life difficult for her. He recently disagreed with her contention that Europe would fail if the euro failed. “I don’t see the connection,” he stated bluntly.

As far as the CDU goes, its chief whip, Peter Altmeier, is confident. “As a chief whip, I have to be optimistic, but so far we have managed to win every single struggle in parliament, every single vote and that is going to happen again this Thursday,” he told the BBC on Wednesday.

You can watch the German debate live here

7.49am: City traders believe the stock markets will lose ground again this morning, at least until the German vote on the EFSF has been concluded. Last night the Dow Jones index fell 1.6%, after the FTSE 100 has shed 76 points.

Chris Weston of IG Markets warned that:

In what is becoming an increasingly common theme, investor sentiment faltered once again yesterday over the outlook for successfully navigating the eurozone debt crisis.

7.38am: Here’s a breakdown of some of the key timings today:

• The Bundestag will start debating the EFSF expansion at 9am CET (8am BST)
• Voting is expected to begin at 11am CET (10am BST)
• The EU summit in Warsaw is taking place all day
• Eurozone consumer confidence data is released at 11am CET (10am BST)
• Revised US second-quarter GDP is released at 8.30am EST (1.30BST)

7.31am: Good morning, and welcome to our rolling coverage of the European debt crisis. Later this morning, the German Bundestag will vote on the proposal to enlarge and extend the eurozone rescue packaga.

Angela Merkel is likely to win the vote, but may lose the support of some members of her own coalition.

Elsewhere, Nick Clegg will address the EU summit in Warsaw. The deputy prime minister is expected to warn that the European Union could fragment if its members fail to work together to resolve the situation.

More strikes are expected in Greece, where international inspectors will begin to assess whether George Papandreou’s administration has done enough to earn the next €8bn portion of its bailout fund.

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