The European Union has nominated outgoing Spanish finance minister Mr Rodrigo Rato to succeed Mr Horst Köhler as managing director of the International Monetary Fund (IMF). The post is traditionally held by a European and the United States has indicated that it will support Mr Rato, making his appointment almost certain.

The EU decision, which was announced last night, follows a decision on Monday by Mr Jean Lemièrre to accept a new term as president of the European Bank of Reconstruction and Development (EBRD). France and Germany backed Mr Lemièrre for the IMF post but a consultation conducted by Britain's Chancellor of the Exchequer, Mr Gordon Brown, concluded that Mr Rato would be more acceptable to non-European countries.

The Minister for Finance, Mr McCreevy, last night expressed confidence that Mr Rato would receive broad support from the members of the IMF when its executive board considers the appointment.

The IMF job became vacant last month when Mr Köhler resigned to become a candidate for the German presidency.