Eurobonds on agenda despite German no

Eurobonds will dominate the EU leaders’ summit in Brussels this evening despite Germany insisting it will not consider the idea. The bonds would immediately lower Ireland’s borrowing costs.

Taoiseach Enda Kenny told the Dáil that serious consideration had to be given to ideas such as eurobonds. They will be pushed by a number of countries, led by France and Italy.

He will also be preparing the ground for measures designed to raise billions for investment in growth and jobs in Ireland. It is expected to be fully unveiled at the main summit in June.

It will include getting a bigger slice of EU funds than Ireland would be normally entitled to.

“We want the focus to be on those who need them most, and those who can make best use of them, including in tackling unemployment in countries like Ireland that face the greatest challenges,” he said.

World leaders including Barack Obama have urged the eurozone to co-ordinate their efforts more effectively as the Greek debt crisis affects the US and the Spanish banking crisis threatens to spread contagion further.

The failure to deal with the three-year crisis has kept the cost of Ireland’s borrowing higher than it should be at this stage, according to Central Bank governor Patrick Honohan.

Europe minister Lucinda Creighton warned there was a strong possibility that the country would not be able to access the international markets for funding next year as planned, raising the prospect of needing more funding from the EU.

The informal dinner meeting was initially called to allow French president François Hollande to make his case for a growth pact. His aides have said if he does not get it, he will push to reopen the fiscal treaty.

He has said he will raise the eurobonds issue which many see as a ploy to soften up Germany to ensure it goes along with a comprehensive growth strategy, and possibly commit to eurobonds at some stage in the future.

European economics commissioner Olli Rehn said he hoped there would be discussions on a roadmap to eurobonds issuance.

The Taoiseach said he wanted to see some “fresh thinking and courageous action at EU level” and that tonight’s meeting “opens a very important new chapter”. However no firm decisions are expected to be taken.

“We will have a comprehensive discussion designed to pave the way politically for decisions at our meeting at the end of June,” Mr Kenny told the Dáil, referring to the regular summer summit next month.

They are likely to welcome a pilot project on project bonds agreed by the European Parliament yesterday, having been delayed for months by rows between the parliament and the EU countries.

The pilot that would use €230 million of EU funds as loans and guarantees that could leverage up to €4.6bn of private investment to fund transport, energy and information and communication technology.