Plans to boost the Eurozone bailout fund were last night dealt a blow when Slovakia refused to ratify the increase.

The country, which only joined the EU in 2009, voted against increasing the size and powers of the European financial stability facility (EFSF).

Prime Minister Iveta Radicova’s coalition government collapsed after attaching a no-confidence vote to the bailout fund, with only 55 out of the 150 MPs supporting the bill.

Slovakia is the first country to vote down the changes to the EFSF, with all member countries needing to ratify the changes for them to be passed.

The changes would boost the fund’s maximum guarantees to €780 billion (£683 billion), with a lending capacity of €440 billion (£385 billion), and allow the fund to buy sovereign bonds and bail out banks.

Richard Sulik, leader of the SaS party, which was part of the coalition but abstained from the vote, claimed the fund is ‘the greatest threat to the euro’.

‘Today we saved more than €300bn (£263 billion) for the European taxpayers that would have been used to bail out banks,’ he said, after the vote.

The changes to the EFSF would have forced Slovakia to provide around €7.7 billion (£6.7 billion) in guarantees, which is roughly equal to 12% of its annual economic output.

The opposition party, Smer, opposed the EFSF vote on purely political grounds, stating that they support the changes but wanted to see the coalition government collapse.

A new coalition government is now likely to be formed, with a second vote on the EFSF likely to occur within a week, with all signs pointing to it passing.

The prospect of another vote has meant that the markets, which fluctuated yesterday on the prospect of the vote, have reacted positively despite the setback, with the European markets opening up this morning.