Bundestag backs revised eurozone bail-out fund

Germany’s parliament has voted to expand the powers of the eurozone’s bail-out fund.

The Bundestag approved the changes by a large majority, with 523 MPs voting in favour, 86 against and three abstentions.

It means that Angela Merkel, Germany’s chancellor, has convinced most of her centre-right colleagues of the need to approve a deal reached at a summit of eurozone heads of state and government on 21 July. German opposition Green and centre-left MPs also voted in favour.

Fifteen members of Merkel’s government either voted against the changes or abstained. However, this rebellion was not sufficient to wipe out her “chancellor’s majority” of 19, which would have been damaging politically as it would have meant relying on the support of the opposition.

The changes to the European Financial Stability Facility (EFSF) would allow it to buy bonds on the secondary market, re-capitalise struggling banks and grant credit-lines to eurozone countries with debt problems.

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Germany’s approval, following Finland’s yesterday, means that, of 17 countries that use the euro, 11 have approved the changes, leaving Estonia, Malta, the Netherlands, Cyprus, Slovakia and Portugal to endorse the changes. All have to give their approval before the changes can be implemented.

A spokesman for Olli Rehn, the European commissioner for economic and monetary affairs, said: “We welcome this new approval. Yesterday was Finland, the day before was Slovenia. The process is moving forward.”

He said the European Commission hoped that all countries would ratify the changes by mid-October, which would be “very good news for the eurozone and the European Union” because it would mean that the EFSF would have “enough firepower” to deal with the crisis.