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EU ready to help Greece on debts EU ready to help Greece on debts
(20 minutes later)
EU leaders say they are ready to act to shore up Greece's finances and ensure stability in the eurozone - but they have made no specific promise of aid.EU leaders say they are ready to act to shore up Greece's finances and ensure stability in the eurozone - but they have made no specific promise of aid.
Greece must take further measures to tackle its huge debts and cut its budget deficit by 4% this year, the EU leaders said after a Brussels summit.Greece must take further measures to tackle its huge debts and cut its budget deficit by 4% this year, the EU leaders said after a Brussels summit.
The statement did not spell out what was meant by "determined and co-ordinated action, if needed".The statement did not spell out what was meant by "determined and co-ordinated action, if needed".
Greece's debt crisis has put pressure on the euro, making markets nervous.Greece's debt crisis has put pressure on the euro, making markets nervous.
Other countries with big deficits in the 16-nation eurozone, such as Portugal and Spain, are seen as vulnerable if Greece's problems are not tackled resolutely.Other countries with big deficits in the 16-nation eurozone, such as Portugal and Spain, are seen as vulnerable if Greece's problems are not tackled resolutely.
Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. For years Greek spending has ballooned while tax revenue has diminished.Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. For years Greek spending has ballooned while tax revenue has diminished.
The Greek people will be watching to see if they face additional austerity measures Gavin HewittBBC Europe editor Read more in Gavin's blog Stephanomics: Deal no silver bullet Why Greece's problems matter Europe's PIGS: Country by countryThe Greek people will be watching to see if they face additional austerity measures Gavin HewittBBC Europe editor Read more in Gavin's blog Stephanomics: Deal no silver bullet Why Greece's problems matter Europe's PIGS: Country by country
The President of the European Council, Herman Van Rompuy, stressed that Greece had not asked for financial aid.The President of the European Council, Herman Van Rompuy, stressed that Greece had not asked for financial aid.
The summit statement said "We fully support the efforts of the Greek government and their commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met.The summit statement said "We fully support the efforts of the Greek government and their commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met.
"We call on the Greek government to implement all these measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4% in 2010.""We call on the Greek government to implement all these measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4% in 2010."
German Chancellor Angela Merkel said Greece "will not be left on its own, but there are rules and these rules must be adhered to".German Chancellor Angela Merkel said Greece "will not be left on its own, but there are rules and these rules must be adhered to".
The BBC's Dominic Hughes in Brussels says the details of the EU help for Greece may not emerge until Monday, when eurozone finance ministers will meet. The BBC's Dominic Hughes in Brussels says the details of any EU help for Greece may not emerge until Monday, when eurozone finance ministers will meet.
It is the first big test for Mr Van Rompuy, who wanted the summit to focus on a new strategy for jobs and growth - a blueprint for the next 10 years. But defending the euro is now a more pressing issue.It is the first big test for Mr Van Rompuy, who wanted the summit to focus on a new strategy for jobs and growth - a blueprint for the next 10 years. But defending the euro is now a more pressing issue.
EU rules prevent the eurozone from collectively bailing out Greece, but the debt crisis has forced EU leaders to seek ways to help nevertheless.EU rules prevent the eurozone from collectively bailing out Greece, but the debt crisis has forced EU leaders to seek ways to help nevertheless.
UK Prime Minister Gordon Brown stressed that "the discussions at the moment are within the euro area," when asked if UK taxpayers' money would be part of any EU aid.UK Prime Minister Gordon Brown stressed that "the discussions at the moment are within the euro area," when asked if UK taxpayers' money would be part of any EU aid.
Eurozone contagion fears Unpopular measures
The markets remain sceptical that Greece will be able to pay its debts.The markets remain sceptical that Greece will be able to pay its debts.
Any EU budget support for Greece is likely to come with stringent conditions, to ensure that Athens fulfils its austerity plans and to reassure European voters that their taxes will not be diverted to propping up Greece.
GREEK AUSTERITY PLAN Cut budget deficit below EU ceiling of 3% of GDP by 2012, from 12.7% in 2009Freeze public sector salaries and cut bonusesReplace only one in five of people leaving civil serviceRaise average retirement age by two years to 63, by 2015Raise taxes on fuel, tobacco, alcohol and property Q&A: Greece's economic woes Greeks' aversion to taxes Jobless rate in Greece hits 10%GREEK AUSTERITY PLAN Cut budget deficit below EU ceiling of 3% of GDP by 2012, from 12.7% in 2009Freeze public sector salaries and cut bonusesReplace only one in five of people leaving civil serviceRaise average retirement age by two years to 63, by 2015Raise taxes on fuel, tobacco, alcohol and property Q&A: Greece's economic woes Greeks' aversion to taxes Jobless rate in Greece hits 10%
Any EU budget support for Greece is likely to come with stringent conditions, to ensure that Athens fulfils its austerity plans and to reassure European voters that their taxes will not be diverted to propping up Greece.
Thursday's talks followed a public sector strike that brought many services to a standstill in Greece.Thursday's talks followed a public sector strike that brought many services to a standstill in Greece.
The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions.The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions.
Its debt is about 300bn euros ($419bn; £259bn), and the government estimates it will need to borrow about 53bn euros this year to cover budget shortfalls.Its debt is about 300bn euros ($419bn; £259bn), and the government estimates it will need to borrow about 53bn euros this year to cover budget shortfalls.
Debt servicing is now costing Greece 11.6% of its gross domestic product and it has to pay more interest on loans now because its credit rating has been downgraded.Debt servicing is now costing Greece 11.6% of its gross domestic product and it has to pay more interest on loans now because its credit rating has been downgraded.
Wary of IMF helpWary of IMF help
Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees.Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees.
In addition, the European Commission may decide to disburse regional aid to Greece earlier than planned.
HAVE YOUR SAYSince the Greek debt problem put them some three times over what the EU is supposed to allow I can't see the justice in thisnothins_ever_easy, Belfast Send us your commentsHAVE YOUR SAYSince the Greek debt problem put them some three times over what the EU is supposed to allow I can't see the justice in thisnothins_ever_easy, Belfast Send us your comments
In addition, the European Commission may decide to disburse regional aid to Greece earlier than planned.
But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency.But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency.
The European Commission is working on a blueprint for the EU's long-term recovery and growth, called Europe 2020, which is expected by early March. They have asked the European Commission to draft additional measures to be taken by Greece, "drawing on the expertise of the IMF". The EU will assess Greece's implementation of the austerity plan next month.
The Commission is also working on a blueprint for the EU's long-term recovery and growth, called Europe 2020, which is expected by early March.
It will replace the Lisbon Strategy, launched in 2000, which became a victim of the global financial crisis and of fiscal rule-breaking by EU governments.It will replace the Lisbon Strategy, launched in 2000, which became a victim of the global financial crisis and of fiscal rule-breaking by EU governments.
Mr Van Rompuy is reported to favour tighter EU co-ordination of economic policy and enhanced EU surveillance of member states' budgets.
Are you in Greece or another EU country? How do you think the EU should deal with Greece's debt problems? Send us your comments using the form below.Are you in Greece or another EU country? How do you think the EU should deal with Greece's debt problems? Send us your comments using the form below.
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