EU on the brink: Germany tells Greece to back cuts or face euro exit

Raising the spectre of a Greek exit, the German chancellor stated “solidarity for the euro” was threatened by the ongoing political crisis in Athens.

Stock markets around the globe fell sharply with fears mounting that a euro break-up could lead to renewed monetary turmoil. The FTSE-100 index of Britain’s main firms fell by two per cent to 5465, with bank shares hit particularly tough.

The cost of Spanish government borrowing also hit a record substantial since the single currency was introduced since of concerns that the crisis will spread.

Today, François Hollande, the new French president, will be sworn in and, in an indication of the concern gripping Europe, will nearly quickly travel to Berlin to hold talks with Mrs Merkel that will be dominated by Greece’s plight.

Attempts to kind a new government in Athens have been thwarted for the past nine days, though the country’s president will meet all main parties this afternoon to discuss the forming of a “technocratic” administration instead than a coalition.

Sources and more information:

• Merkel To Greece: Shape Up Or Ship Out Of The EU…Greek Minister Warns of Civil War

With a debt burden 160 of its GDP, Greece formally agreed three months ago to the EU’s austere plan of severe spending cuts and financial reform in exchange for a financial bailout. But, the majority of Greeks refused to accept the notion of responsible debt spending and voted in defiance of the financial treaty.

• Merkel tells Greece to back cuts or face euro exit – Telegraph

• Hollande and Merkel to hold talks