Belfast Telegraph

Thursday 21 August 2014

Fresh Athens disarray hits financial markets

Financial markets were plunged into fresh uncertainty after Greece's political parties failed once again to agree to form a unity government, and European policymakers warned that Greece's aid payments would be cut off unless Athens quickly produced an administration prepared to deliver far-reaching economic reforms and budget cuts.

Without those funds from the European Union and the International Monetary Fund, Greece could run out of cash to meet its national debt interest payments as early as next month.

The country would then have no option but to default. Most analysts expect that a default would be a prelude to a Greek exit from the single currency altogether.

The leaders of Greece's major political parties have until Thursday, when parliament is due to convene in Athens, to form a national government.

Otherwise new elections will be called for June. Opinion polls suggest that those polls would simply strengthen the hand of parties opposed to the terms of the EU/IMF bailouts.

The moderate Democratic Left party has said that it would not join a coalition without the involvement of the far-left Syriza party, which won the second largest share of votes in the May 6 election and which has refused to accept the conditions attached to Greece's two multibillion-euro rescues.

A spokeswoman for the European Commission said Greece's future remained in its own hands, but added that there could be no question of renegotiating the conditions attached to Athens' international support package.

“We wish Greece will remain in the euro and we hope Greece will remain in the euro.

“But it must respect its commitments,” said Pia Ahrenkilde Hansen.

Factfile

Global stock markets saw heavy selling in response to the threat of a break-up of the eurozone, with the FTSE 100 index in London falling by 1.97%. Germany's DAX slid by 1.94% and France's CAC took a 2.29% hit. Wall Street fell by 1% on opening. Confidence in the international bond markets also plummeted.

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