Tags: merkel | greece | threatens | euro

Merkel: Greek Budget Crisis May Doom the Euro

Tuesday, 19 Jan 2010 08:47 AM

German Chancellor Angela Merkel says Greece’s budget crisis puts the euro in jeopardy.

Greece’s budget deficit has surged to 12.7 percent of gross domestic product, or GDP.

Merkel expressed concern about fiscal issues for euro zone members in a recent speech.

“The Greek example can put us under great, great pressures,” she said.

“Who will tell the Greek parliament to please go ahead and pass a pension reform? I don’t know that they’ll be enthusiastic about Germany giving them instructions.”

Germany certainly wouldn’t be happy to receive advice from Greece if the tables were turned, Merkel said.

“So the euro is in a very difficult phase over the coming years.”

The European Union’s rules stipulate that member countries’ budget deficits can’t exceed 3 percent of GDP.

Greek Prime Minister George Papandreou has a plan to cut the gap to 8.7 percent of GDP this year through spending cuts and revenue increases.

“We will do whatever it takes,” he said in a speech.

Papandreou pledged that Greece won’t exit the euro and won’t turn to the International Monetary Fund for help.

But Moody’s Investors Service shares Merkel’s concern.

Exploding debt burdens and weak economic competitiveness puts both Greece and Portugal in grave danger, it says in a report.

Greece and Portugal may have raise interest rates and taxes, Moody’s says.

"Over time, this chain of events would lead to a 'slow death' of an economy within the euro area.”

© 2017 Thomson/Reuters. All rights reserved.

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German Chancellor Angela Merkel says Greece s budget crisis puts the euro in jeopardy. Greece s budget deficit has surged to 12.7 percent of gross domestic product, or GDP. Merkel expressed concern about fiscal issues for euro zone members in a recent speech. The Greek...
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