Europe is uniting to help save the euro from collapse.

The International Monetary Fund (IMF) has approved a €30 billion (£26bn) Stand-By arrangement for the Greek economy, with an initial payment of €5.5bn now to help it through its immediate crisis.

After months of negotiations, the Stand-By arrangement was announced today as part of a three-year package of financing alongside the European Union (EU) amounting to €110bn.

“The Greek government should be commended for committing to an historic course of action that will give this proud nation a chance of rising above its current troubles and securing a better future for the Greek people,” said IMF Managing Director Dominique Strauss-Kahn.

“Today, the IMF has demonstrated its commitment to doing what it can to help Greece and its people. The road ahead will be difficult.”

Greece is just one of the European economies which has been struggling with mountains of debt and has been in desperate need of a rescue package to ensure its economy doesn’t collapse, bringing many other Eurozone countries down with it. Strikes by public sector workers over pay freezes and increased taxes last week resulted in the death of three people in the Greek capital of Athens.

“Today’s strong action by the IMF to support Greece will contribute to the broad international effort underway to help bring stability to the euro area and secure recovery in the global economy,” Ms Strauss-Kahn added.

Rumours are rife that the Spanish and Portuguese economies are also on the brink of collapse.

In related news, the Economy and Finance Council (Ecofin) – composed of Member States whose currency is the euro - has announced today that after an 11-hour meeting, which finished in the early hours of this morning, it had agreed on a loan package of more than €500,000 million to “cover the needs of members with solvency problems and to defend the euro.”

The Spanish Presidency of the EU had called the extraordinary Ecofin meeting in order to set in motion financial stability mechanisms.

The European Commissioner for Economic and Monetary Affairs, Olli Rehn, confirmed that the European Commission is working to guarantee financial stability in Europe. He said: “We are talking about the financial stability of the Eurozone as a whole.”

The FTSE 100 opened up with a rise of 2.8% today as news of the Greek bail-out spread. The announcement has also helped to overshadow the continuing political uncertainty in the UK which saw the pound fall dramatically against the dollar and euro on Friday.