Greek deal delayed as fears rise
EUROZONE leaders put off a deal on Greece’s aid yet again yesterday, saying that they could not decide whether to pay out Athens’ next €12bn (£10.6bn) tranche of aid until the result of a no-confidence vote in the drachma tonight.
If Greek MPs vote to depose their new government and not to pass another €28bn worth of cuts, the EU will find its threat to withhold aid tested in the face of a likely default by the Eurozone’s weakest member.
Antonio Tajani, vice president of the European Commission, told City A.M.: “Without a strong Greek project to promote growth and reduce the debt, it’s impossible to have a good solution from Europe for Greece.”
But there is now not likely to be a deal on a new bailout until July.
After a revamp of his Cabinet and the appointment of a new finance minister Greek Prime Minister George Papandreou is expected to win the vote narrowly.
However, the uncertainty saw £3.9bn wiped off the market cap of the UK’s major banks on worries about their Eurozone exposure.
Meanwhile Prime Minister David Cameron vowed that Britain will not pay more to fund a Greek bailout than already pledged under the IMF.
City minister Mark Hoban told parliament that the Treasury is planning for several scenarios, and would not comment on the possibility of the euro’s demise.