Barroso: We have a credible package

European Commission president Jose Manuel Barroso said for the first time in the crisis, politics and the international money markets had come together.

At an emergency summit in Brussels, eurozone leaders agreed a new bailout package for debt-laden Greece worth €109bn with a lower interest rate and more time to pay it off.

“We needed a credible package, we have a credible package,” Mr Barroso said.

“It deals with both the concerns of the markets and citizens.

The Taoiseach Enda Kenny has welcomed the Eurozone deal which will see a reduction in the interest rate on Ireland's EU/IMF bailout.

The cut of around 2% will reduce the cost of Ireland's loan by around €800m a year.

At the emergency summit in Brussels, the eurozone leaders opted to double the maturity of Ireland and Greece’s package from seven and a half years to 15 years and cut the interest rate to about 3.5%.

Mr Barroso said: “It responds also to the concerns of all member states of the euro area.

“It is a package that every government has signed up to.

“For the first time in the crisis, politics and markets are coming together.”

The softer lending conditions were also extended to bailed-out Portugal and Ireland in an attempt to finally ensure the stability of the single currency and stave off debt contagion from spreading to Italy and Spain.

Another key aspect of the agreement is an expansion of the role of the European bail-out programme – the European Financial Stability Facility (EFSF) – so it can act more freely.

Under the plan the private sector will provide €37bn in support to Greece.

French president Nicolas Sarkozy said there would be no private sector involvement with Ireland or Portugal.

“With respect to the two other countries under the programme, Ireland and Portugal, we are going to reduce rates and lengthen the maturities of the loans granted by the European monetary fund but we will exclude any private sector involvement,” Mr Sarkozy said.

President of the European Council Herman Van Rompuy said the eurozone problems could only be solved at the highest level.

“We had to act quickly,” he said.

“Convening this meeting focused the minds and accelerated finding a solution.

“I could not allow a difficult situation to become a dangerous one.”

Greek prime minister George Papandreou said the agreement would help ease the burden on his country.

“We now have a programme and a package of decisions which create a sustainable path for Greece, a sustainable debt management for Greece, and this in the end of course will mean not only the funding of a programme, but it will also mean the lightening of the burden on the Greek people,” he said.

Mr Papandreou said Greece was committed to implementing the programme, to make the country viable, just and one of growth and job creation.

The latest summit had been demanded by France but opposed by Germany and other countries, concerned that more inconclusive talks would only worsen the market response.

The measures are designed to be a eurozone-wide move to pull the EU back from the brink of financial crisis and prevent the contagion effect from spreading to economies such as Italy and Spain.