Europe open to debt forgiveness idea

DEBT forgiveness for mortgage holders could be considered provided it does not breach our austerity programme, according to the European Commission.

Following weeks of pressure amid reports of growing numbers of people falling into arrears on their home loans, Finance Minister Michael Noonan quashed rumours that he was considering debt forgiveness measures.

But Brussels said it would be willing to discuss proposals from the Government and consider the economic and financial effects.

“Facilitating efforts by individuals and lenders to address significant over-indebtedness is to be considered under the programme conditionality,” the statement said.

“This includes non-judicial debt settlement. The objective is to permit efficient and effective insolvency proceedings while minimising moral hazard.”

Yesterday was another black day for the euro as European stocks plunged amid fears Greece will not be able to meet its budget-cutting targets and could face default.

The troika — the European Commission, IMF and ECB — left Athens last Friday after giving the government two weeks to produce a detailed list of fiscal measures it is taking. They are concerned that no effort has been made to sell state assets.

Further potential trouble looms tomorrow as the German constitutional court is due to rule on the legality of the eurozone bailouts. They are expected to insist on greater German government involvement on approving such measures — something that could hamper the eurozone’s capacity to help countries under pressure.