Greece fails to win political approval for €12bn in cuts
Greece failed to clinch political agreement on a plan to save nearly €12bn over the next two years, in a setback to its efforts to convince visiting EU and IMF inspectors it deserves to be kept in the eurozone.
After days of wrangling, the new conservative-led government said it had hammered out the austerity cuts hours before top officials from its foreign lenders began meetings yesterday to assess Greece's compliance with the terms of its latest bailout.
But the savings -- expected from everything including cuts to welfare benefits, pensions and rents on ministry buildings -- failed to win the blessing of Prime Minister Antonis Samaras's allies, the Socialists and the Democratic Left party.
In his first visit to the near-bankrupt country in three years, European Commission President Jose Manuel Barroso offered a public show of support to Samaras -- but accompanied that with a warning that Greece must come good on promises to reform.
"The key word here is deliver. Deliver, deliver, deliver!" Mr Barroso said, adding he was convinced Samaras's government would do so. "Greece should stay in the euro as long as commitments made are being honoured."
The chances of Greece leaving the euro in the next 12 to 18 months have risen to about 90pc and Athens is most likely to quit the single currency within the next two to three quarters, US bank Citi said in a report.
New ECB data show deposits at Greek banks hit their lowest level in six years in June. (Reuters)