A leading economist is warning that Europe must deal with the issue of ‘legacy debt’.

Professor Joseph Stiglitz has said that the Eurozone will not be able to recover if the issue is not dealt with.

His comments come following murmurings in Europe that European Union money should not be used to pay for so called “legacy assets” including older bank debt.

Mr. Stiglitz says he hopes European leaders realise that the issue cannot be ignored.

After a meeting last week the German, Dutch and Finnish Finance Ministers issued a joint statement.

In it they said that the European bailout fund should only be used to deal with current difficulties and would not apply to legacy assets.

Meanwhile the Finish Prime Minister has also said that Eurozone policymakers should discuss introducing International Monetary Fund (IMF)-style precautionary credits to help troubled states retain access to bond markets.

However the Finance Minister said on Friday he was hopeful of a substantial deal on Irish banking debt before Budget day.

Michael Noonan said he has not scaled back his hopes of an agreement despite concerns over a statement issued by the trio earlier this week.

Mr. Noonan also said earlier last week that a diplomatic offensive will continue to ensure Ireland gets a deal on bank debt.

While the Taoiseach told the Dáil that the deal agreed by EU leaders in June would be implemented.

Speaking to Breakfast here on Newstalk Professor Stiglitz said Ireland has little choice in our options.

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