European deal will seek to separate banking debt and national debt in Eurozone countries.

A change in banking policy at European level should mean a fall in the cost of borrowing for Ireland. 

The deal breaks the link between bank debt and sovereign debt and specifically promises to examine the situation of the Irish financial sector.

Taoiseach Enda Kenny described the change as a "seismic shift" as the link is broken between banking debt and sovereign or national debt. However, the details of the deal still need to be worked out. 

Following a two-day summit in Brussels, it's been agreed that the European Union's permanent bail-out fund will be able to directly recapitalise banks. At present, it is impossible to say what the precise benefits to Ireland will be but it is anticipated that it will become easier for Ireland to return to the bond markets. However, the bank debt will still have to be repaid. 

The deal was secured by Spanish and Italian leaders after threatening to block all summit business. German Chancellor Angela Merkel emphasised that the proposals still require a vote of support from all Eurozone countries.

The deal received a largely positive response from opposition parties in Ireland. However, Sinn Féin accused the government of over-selling it, with Gerry Adams commenting

For the Tánaiste to say it's a game-changer is gross exaggeration.

While the Fianna Fáil party are supportive of the deal, they want more details on the government's position on what has been agreed. Speaking to the press outside Leinster House, Fianna Fáil Senator Darragh O'Brien said

I think our own government should have an Irish position on what we require.

Independent TD Stephen Donnelly says that the deal is really only of use to Ireland if it's applied retrospectively.   

An RTÉ News report broadcast on 29 June 2012. The reporters are Paul Cunningham and David Davin-Power.