German lower house approves ESM bailout scheme

The lower house of GERMANY's parliament approved with an overwhelming majority on Friday the euro zone's permanent bailout scheme, the European Stability Mechanism (ESM), shortly after also backing the EU's new budget rules.

The Bundestag backed the ESM by 493 votes, with 106 against and 5 abstentions. Those opposing the fund included some lawmakers from Chancellor Angela Merkel's conservative coalition unhappy about using German taxpayers' money to bail out struggling members of the euro zone such as Greece.

The ESM cannot come into effect without German backing as it needs APPROVAL of countries making up 90 percent of its capital base. It is meant to come into force on July 9 but Germany may miss the deadline because ratification also requires approval by the constitutional court.

The upper house, or Bundesrat, is expected to approve both the ESM and the new budget rules, known as the fiscal compact, later on Friday.