EU dithering could bring on Armageddon

GREECE is running out of time, its Prime Minister warned yesterday, even as Germany batted off suggestions that it should attend an emergency summit on Friday and instead put off the meeting until next week.

The markets were unimpressed by this latest bout of dithering over the timing of the Eurozone’s next crisis talks, with economists at Investec warning that the EU’s muddled approach risks “Armageddon”.

Investec’s Phillip Shaw and Victoria Cadman added that “if euro area finance ministers continue to play catch up with markets, rather than acting in a timely manner”, they could face intervention from other international bodies such as the IMF to prevent a wave of defaults across Europe.

Capital Economics’ Jennifer McKeown called Italy a “ticking timebomb” and said: “An Italian crisis might be the trigger for a collapse of the Eurozone.”

Fitch added to Europe’s woes by downgrading Greece further into junk territory – a decision the beleaguered sovereign called “bewildering”.

And Mario Draghi, the incoming president of the European Central Bank (ECB), took the unusual step of criticising Europe’s crisis-management, saying that it had “increased uncertainty in financial markets”.

“We must now bring certainty to the process by which sovereign debt crises are managed, by clearly defining political objectives, the design of instruments and the amount of resources,” he said.

But markets are anything but certain about how and when Greece’s latest €100bn rescue will arrive.

The IMF voiced support for private-sector involvement in a second bailout yesterday but without detailing how it would work, while German finance minister Wolfgang Schäuble reiterated the view that burden-sharing is a “certainty”.

But the ECB remains firmly opposed to the idea on the grounds that it will exacerbate market panic.