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Greece debt crisis sends financial markets falling

Category: Business

Published: 16th Jun 2011 10:37:29

Financial markets have fallen further as investors sold shares on fears about the impact of Greece's economic crisis.

Every European market opened lower, with London, Paris and Frankfurt initially down more than 1%.

The sell-off followed falls in Asian markets, with investors worried that the Greek economy has reached a tipping point and that contagion will spread.

Greece's prime minister will try on Thursday to form a new cabinet and push through a debt restructuring plan.

To avoid the government defaulting on its debts, George Papandreou must pass new spending cuts and sell-offs of state property to receive new bail-out funds from the European Union and International Monetary Fund.

But rioters have again taken to the streets, and on Thursday, George Floridis, Greece's former deputy finance minister, resigned in protest at the slow pace of economic reforms.

There have been reports that Mr Papandreou may seek to replace his finance minister, George Papaconstantinou, the main architect of hugely unpopular budget cuts.

The crisis comes amid a backdrop of soaring unemployment, with new figures on Thursday showing that the jobless rate rose to 15.9% in the last three months, up from 14.2% for the same quarter last year.

French and European Central Bank officials have warned that a restructuring of Greece's 350bn-euro debt as proposed by Germany could cause a default that would shake the whole eurozone.

French President Nicolas Sarkozy on Thursday urged other European leaders to find a compromise on Greece's debt crisis to stabilize the euro.

Without stability, there would be no economic growth in the eurozone, he said.

France's three biggest banks are at risk of a credit downgrade because of exposure to Greek debt.

Source:
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BBC News, 2011. Greece debt crisis sends financial markets falling [Online] (Updated 16th Jun 2011)
Available at: http://www.ukwirednews.com/news/162592/Greece-debt-crisis-sends-financial-markets-falling [Accessed 24th Apr 2014]

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