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EU crisis deepens as Greece takes centre stage

business Updated: Feb 15, 2012 22:21 IST

Agencies
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Greece will meet European Union demands for budget action and reform pledges from its political leaders ahead of a euro zone conference call later on Wednesday, the Greek finance minister said.

“Only a few issues remain,” finance minister Evangelos Venizelos told reporters after a meeting with Greece’s head of state, President Carolos Papoulias. “They will be clarified by the teleconference.”

Meanwhile, membership of Greece in the euro zone was also thrown dramatically centre stage on Wednesdaywith the Greek finance minister saying some countries wanted it out and Germany complaining of “a bottomless pit.”

The two statements amounted to the clearest evidence yet that Greece is fighting for its life in the euro zone after finance ministers issued another ultimatum late on Tuesday on a debt rescue to avert imminent Greek default.

In Athens, Greek finance minister Evangelos Venizelos declared: “The country is on a knife’s edge.” He said: “We have to tell the Greek people the truth ... There are several (euro zone countries) who no longer want us.”

In Germany, finance minister Wolfgang Schaeuble told SWR radio: “We want to do everything we can to help Greece ... we can help but we are not going to pour money into a bottomless pit.”

Italy in recession
Italy has slid back into recession after the economy shrank 0.7% in the fourth quarter following stringent budget cuts aimed at stabilising the public finances, official data showed on Wednesday.

The economy contracted 0.2% in the third quarter and a recession is normally defined as two consecutive quarters of economic contraction. Figures from the Istat data agency showed overall growth of 0.4% for 2011.

Portugal raises $3.9 bn
Bailed-out Portugal has managed to raise €3 billion ($3.9 billion) in a debt auction despite concerns that a deepening recession could force it to ask for more international financial help.

Portugal has enacted broad spending cuts to reduce its a massive debt load, but after a double-dip recession in 2011, the government forecasts a further 3% contraction this year.

China to support
China will continue to invest in euro zone government debt and it remains confident in the euro, the country’s central bank governor said on Wednesday, while calling on Europeans to produce more attractive investment products for China.

Zhou Xiaochuan admitted that China and other emerging nations like Brazil, Russia or India were waiting for the right time to help the bloc, after a EU state visit was once again met with encouraging words but no concrete public commitments on fresh funding from China.

But he also suggested Europe needed to work harder to entice Beijing to part with its capital.

He reiterated Premier Wen Jiabao’s comments that China was ready to play a bigger role in solving Europe’s debt problems, noting China had not cut its reserves exposure to the euro zone.

AFP & Reuters