Business World

Monday 11 December 2017

Greece crisis: Failure to reach deal would be severe - George Osborne

Britain's Chancellor of the Exchequer George Osborne
Britain's Chancellor of the Exchequer George Osborne

Colm Kelpie in Brussels

FAILURE to secure a deal for Greece would be very severe for economic and financial stability, UK Chancellor George Osborne warned this morning.

After the sudden collapse of talks between Greece and Eurozone finance ministers last night, Mr Osborne, who is in Brussels for a meeting of all European finance ministers, said ''competence, not chaos'' was now needed.

''We're reaching crunch time for Greece and the Eurozone,' Mr Osborne said.

"I'm here to urge all sides to reach an agreement because the consequence of not having an agreement would be very severe for economic and financial stability.''

Greek finance minister Yanis Varoufakis showed little sign on entering this morning's meeting that Greece was prepared to accept calls for the country to request an extension of its current bailout, a move Athen strongly resists. But he remained upbeat that a deal could be secured.

''The next step is the responsible step. Europe will continue to deliberate in order to enhance the chances of being able to achieve a very good outcome for the average European,'' Mr Varoufakis said.

''We know in Europe how to deliberate in such a way as to create a very good solution, an honourable solution out of initial disagreements.''

Greece has been given a deadline of just days to decide whether it will alter course and request an extension of its current bailout.

The unexpected conclusion to the talks last night has again raised questions about Greece's future in the single currency, with both sides maintaining entrenched positions.

The Greek government, led by far left party Syriza, swept to power last month after an election in which it promised to end austerity measures and to renegotiate the bailout deal.

It has repeatedly resisted calls for an extension of the bailout, instead preferring so-called bridging loans to avert a short-term cash crisis and to allow it time to potentially renegotiate the current deal on less onerous terms.

But talks between Eurozone finance ministers aimed at finding a solution broke down for the second time in less than a week, with Greece referring to a suggestion of a six-month extension as "absurd" and "unacceptable".

Jeroen Dijsselbloem, the chair of the so-called Eurogroup, made up of the 19 eurozone ministers, threw down the gauntlet to Athens, saying it was now up to Greece to make the next move.

This morning, Mr Dijsselbloem suggested the ''wise move'' would be for Greece to apply for an extension.

Other matters are expected to dominate today's meeting in Brussels, which is also being attended by Finance Minister Michael Noonan, including progress made on the investment plan for Europe as well as a discussion on a proposal to establish a European fund for strategic investments.

The rotating presidency of the EU, currently held by Latvia, and the European Commission will inform the council about the G20 meeting of finance ministers and central bank governors which took place last week in Istanbul.

Mr Noonan arrived for the Eurogroup meeting yesterday sporting a black eye as a result of what the Department of Finance described as a ''procedure'' carried out over the weekend.

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