Ireland has drawn down the first tranche of money under its bail-out agreement.

€5 billion has been paid by the European Financial Stability Mechanism to the National Treasury Management Agency today.

The country is expected to draw down €6.6 billion of funds later this month from the International Monetary Fund.

The NTMA received today's money at an interest rate of 5.5% from the EFSM.

Meanwhile, European Commission president Jose Manuel Barroso has urged European leaders to increase the size of the euro zone's debt crisis fund by their next summit in February.

The European Commission believes that the 'effective financing capacity' of the €440 billion fund 'must be reinforced and the scope of its activities widened,' Barroso told a news conference. He was echoing a call made in this morning's Financial Times by EU economic and monetary affairs commissioner Olli Rehn.

But a German government spokesman said such a debate on the fund was not needed at the moment.

Barroso was speaking in Brussels at the launch of a new economic report which kicks off a new era of tighter EU-wide economic governance.

'We are setting out to break new ground and to decisively improve the way in which we manage and co-ordinate our interdependent economies in the European Union,' said Barroso.

As a first step, the commission issued its first Annual Growth Survey, setting out 10 priorities, from reining in public debt to labour market reform. Its recommendations, requiring tailor-made solutions for the various states, are to be integrated into 2011 budgetary plans by the EU nations.

'In the absence of resolute policies, potential growth is likely to remain weak, at around 1.5%, in the coming decade, compared with 1.8% in 2001-2010,' the commission warned.

The report said the outlook was even worse in the euro zone, with growth 1.25% in the coming decade in the 17-nation single currency area compared with growth of 1.6% in 2001-2010.

The commission called for 'further efforts to eliminate premature retirement schemes and increase the statutory retirement age'.

The average retirement age in the EU was 61.4 years old in 2008. Pension reform is a hot issue in Europe. Moves in Greece and France to raise the retirement age last year as part of deeply unpopular austerity measures sparked strikes and massive protests.

The survey issued by the commission marked the beginning of the 'European semester', a six-month exercise which will allow EU authorities to scrutinise national budgets and reform packages before they are voted by legislatures.

The semester culminates in the summer with recommendations from the commission that governments will have to take into account for their 2012 budgets. The initiative was agreed last year in order to avoid the sort of budgetary debacles that led to massive bail-outs of Greece and Ireland.

It also marks a turning point in Europe's integration, taking the EU closer to economic governance and co-ordination.

The survey warned that government debt in the EU was expected to reach 79% of gross domestic product in 2010, 20 percentage points over the 2007 level. The EU's Stability and Growth Pact requires governments to keep their public deficits under 3% of GDP and debt at no more than 60% of GDP.

The pact also asks EU states to reduce their structural budget deficit by 0.5% of GDP every year. But the commission said the target 'would clearly be insufficient' in many EU member states to bring the debt to GDP ratio close to the threshold in the foreseeable future.

Rescue fund debate 'makes no sense' - Germany

Germany has shot down proposals to boost Europe's emergency fund for euro zone countries, saying such as a debate was not needed at the moment.

'The German government finds at the moment that it makes no sense, and first and foremost that it is unnecessary, to talk about expanding the rescue mechanism,' government spokesman Steffen Seibert told reporters.

'This is not the time to announce to the world or to discuss publicly whether an expansion might be necessary some day,' he told a regular government briefing. Mr Seibert added that just 10% of the European Financial Stability Facility (EFSF) had been used so far, bailing out Ireland in late 2010.