Raising the spectre of a Greek exit, the German chancellor said “solidarity for the euro” was threatened by the on[-]going political crisis in Athens.
Stock markets around the world fell sharply with fears mounting that a euro break-up could lead to renewed financial turmoil. The FTSE-100 index of Britain’s major companies fell by two per cent to 5465, with bank shares hit particularly hard.
The cost of Spanish government borrowing also hit a record high since the single currency was introduced because of concerns that the crisis will spread.
Today, François Hollande, the new French president, will be sworn in and, in an indication of the concern gripping Europe, will almost immediately travel to Berlin to hold talks with Mrs Merkel that will be dominated by Greece’s plight.
Attempts to form a new government in Athens have been thwarted for the past nine days, although the country’s president will meet all major parties this afternoon to discuss the forming of a “technocratic” administration rather than a coalition.
An out[-]going Greek minister warned that the country could descend into “civil war” amid the chaos of a euro exit. “If Greece cannot meet its obligations and serve its debt the pain will be great,” Michalis Chrysohoidis was quoted as telling a local radio station. “What will prevail are armed gangs with Kalashnikovs and which one has the greatest number of Kalashnikovs will count … we will end up in civil war.” » | Robert Winnett, David Blair and Bruno Waterfield | Monday, May 14, 2012
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