Joseph Johnson: Italian bond yields have jumped this morning by more than a percentage point to an unsustainable 8.1%. Could the Prime Minister please say what eurozone leaders must now do to stop the contagion?

The Prime Minister: My hon. Friend makes an important point. If you do not have credibility about your plans to deal with your debts and deal with your deficits, whether you like the markets or not, they will not lend you any money. That is what we are seeing in countries like Greece and now, tragically, in Italy, where the price of borrowing money is reaching a totally unsustainable level. It is a lesson for all of us to have sustainable plans to get on top of our debt and our deficits. In terms of Europe, the problem of contagion is that as we agree a decisive write-down of Greek debt, people inevitably start asking questions about other countries. As that happens, you need to have in place the biggest possible firewall. That is what the European Financial Stability Facility is all about, and eurozone leaders urgently need to put flesh on the bones and put figures on the size of that firewall, to stop this contagion going any further.

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