Eurozone leaders may take weeks to resolve debt crisis solution

(EPA; AP)

Peace and prosperity in Europe cannot be guaranteed, the German Chancellor Angela Merkel warned last night, as it emerged that a full deal to save the Eurozone economies will not be finalised for weeks.

European leaders meeting in Brussels believe that market uncertainty is likely to continue well into next month, despite a "political deal" on the broad details of a three-point plan to restore economic confidence.

But the specifics of how to recapitalise Europe's banks, force Greek bondholders to take a "haircut" of up to 60 per cent on their investments and create a €1 trillion fund to prevent future sovereign debt crisis are still to be resolved.

Ms Merkel warned that a deal had to be done. "Nobody should believe that another half a century of peace and prosperity in Europe can be taken for granted. It cannot," she said. "If the euro fails, Europe fails. The fundamental weaknesses and holes in the construction of the economic and monetary union must either be addressed now or, I say, never."

But last night there were concerns that Italy might backtrack on key pledges it made to other European leaders on economic reform – a precondition of any deal.

Silvio Berlusconi spent his last minutes in Rome modifying Italy's "letter of intent" setting out his government's commitments to a timetable for reform.

The original 15-page document contained no dates and sparked a chorus of concerns at the EU. By the time he arrived in Brussels it included a plan to sell €5bn worth of state assets a year for three years and raise the pension age. But privately some senior European officials still question whether Mr Berlusconi can deliver the reforms with a fractured coalition and a slim majority in parliament. Italy has now been given until later next month to provide exact details of how it will implement its plan.

Arriving at the summit, David Cameron said: "We need to have the greatest possible support for the most comprehensive solution possible and that's what we will be discussing."

Meanwhile, Italian deputies exchanged blows in parliament yesterday as tensions over the tough economic reform programme came to a head. Two deputies grabbed each other by the throat as other parliamentarians rushed to separate them.

Britain would be in Brussels holding out "a begging bowl asking for a bail-out" alongside Greece if Labour had won the election, David Cameron claimed in clashes with Ed Miliband ahead of last night's summit.