European Union finance ministers gathered in Brussels on Thursday for a two-day informal meeting that was overshadowed by debt concerns for Spain, Ireland and Portugal, according to dpa. Before the meeting started, Spain's credit rating was downgraded by the Moody's agency, while fears continue to grow that the cost of rescuing Ireland's failed Anglo Irish Bank may force the government to seek a Greek-style bailout. That possibility, however, was ruled out by Luxembourg Prime Minister Jean-Claude Juncker, who heads the Eurogroup committee of eurozone finance ministers. "I don't believe Ireland needs rescuing from the European Financial Stability Facility (EFSF)," Juncker said, referring to the 440-billion-euro (600-billion-dollar) temporary emergency loan fund the EU set up after the Greek debt crisis. International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn - who contributed to the Greek bailout in May - was also expected to take part in the EU discussions on Thursday. Separately, EU economy commissioner Olli Rehn reiterated that the situation of Portugal raised concerns, but indicated that fresh austerity measures announced on Wednesday night by the country's minority government "go in the right direction." Facing record costs for financing its debt, Portuguese authorities tried to reassure markets by pledging to reduce public sector payroll by 5 per cent and raising value-added tax by 2 percentage point to 23 per cent in 2011. "We always said we would do whatever was necessary, there is no reason for alarm," Portuguese Finance Minister Fernando Teixeira Dos Santos said in Brussels, urging the opposition to support the austerity measures. The latest debt worries over the eurozone's weakest economies surfaced as the European Commission proposed an unprecedented crackdown on the European single currency's big spenders. Rehn suggested Wednesday that governments which consistently fail to put their finances in order should face "semi-automatic" fines equal to 0.2 per cent of GDP. He also said countries whose competitiveness is slipping or whose growth is based on "excessive imbalances," such as the housing boom which laid the seeds for the economic downfall of Spain, should face fines of 0.1 per cent of GDP. But the plans still need to win the endorsement of EU governments, as well as of the European Parliament, as French Finance Minister Christine Lagarde highlighted. She said the commission's proposals are "an excellent idea in theory, but the way (to implementing them) all still need to be discussed: we will start today."
