Ernst and Young: Eurozone Stability Fund needs seven-fold increase

The latest eurozone economic forecast from Ernst and Young has revealed that if decisive action is not taken on the eurozone debt crisis, a default scenario in Greece is "unavoidable".

The financial services group has predicted that a seven-fold increase in the €440bn Eurozone Financial Stability Fund will be needed in order to prevent market contagion.

Nicolas Sarkozy and Angela Merkel promised yesterday to unveil a comprehensive package before a G20 summit in France on November the third.

There were no specific details, but they did suggest that their proposals would include a plan for recapitalising European banks and dealing with Greece's debt.