IRISH TIMES REPORTERS
Thursday, May 17, 2012, 06:17
Photograph: Luke MacGregor/Reuters.
British prime minister David Cameron will today urge leaders of the single euro currency bloc to 'sort out its problems'.
A senior judge has
been appointed caretaker prime minister of Greece amid anxiety that the
unyielding political turmoil in the country could prompt a run on its
banks.
Panayiotis Pikrammenos will lead an interim administration
until a second general election, on June 17th, as Greek leaders seek to
break the political stalemate after the first election 11 days ago.
The
failure to form a government has led to concerns the country might
leave the euro if Greeks elect leaders opposed to its EU-IMF bailout
deal. Europe has warned that any refusal to execute the plan would
trigger a withdrawal of emergency aid.
“We believe that is
important, not only for the credibility of Greece but for the
credibility of the euro area, to stick by the programme,” European
Commission chief José Manuel Barroso told reporters in Brussels.
“It
will now be for the Greek people to take a fully informed decision on
the alternatives, having in mind this will be indeed a historic
election.”
The instability in Greece has spooked financial
markets. The single currency and European shares dropped to another
four-month low yesterday and Spanish and Italian borrowing costs rose.
Although
there was no sign of panic or queues yesterday, it emerged that Greeks
had withdrawn some €700 million in bank deposits four days ago.
British
prime minister David Cameron will today promise to do whatever is
needed to protect Britain's economy and banks from a break-up of the
euro zone, and will urge leaders of the single currency bloc to "sort
out its problems".
Mr Cameron's remarks, in a speech to business
leaders in northwest England, are likely to irritate European leaders
trying to keep the euro zone intact as Greece struggles to cope with its
debt crisis.
Britain's Conservative-led coalition has long blamed
its own economic woes on the turbulence in Europe, its main trading
partner, though critics say Mr Cameron's tough austerity measures have
also helped push Britain back into recession this year.
"Either
Europe has a committed, stable, successful euro zone with an effective
firewall, well capitalised and regulated banks, a system of fiscal
burden sharing, and supportive monetary policy - or we are in uncharted
territory which carries huge risks for everybody," Mr Cameron will say,
according to extracts from his speech released in advance.
"As I
have consistently said, it is in Britain's interest for the euro zone to
sort out its problems. But be in no doubt: whichever path is chosen, I
am prepared to do whatever is necessary to protect this country and
secure our economy and financial system."
Greek banks have lost
some €72 billion in deposits – about 30 per cent of the total – since
2010, when its debt problems intensified.
The European Central
Bank said last night that it has stopped providing funding to some Greek
banks. These banks have now moved to a special credit line provided
directly by the Greek central bank, a scheme that mirrors emergency
lending to stricken Irish banks.
In Frankfurt yesterday, ECB chief
Mario Draghi acknowledged the threat to Greece’s membership of the
euro. “I want to state that our strong preference is that Greece will
continue to stay in the euro area,” Mr Draghi said.
