Monday, June 20, 2011

Treasury plans for Greece to go bust

Treasury ministers have admitted that the Government is drawing up contingency plans for a Greek bankruptcy after being warned by a former foreign secretary that the euro “cannot last”. 

By Robert Winnett, Deputy Political Editor

(The Telegraph) Jack Straw, the former Labour foreign secretary, said that a “quick” end to the single currency was now better than a “slow death”.

In an emergency debate, senior MPs from all parties demanded that Britain stand aside from a new rescue package for Greece and push for the country to leave the euro.

Mark Hoban, a Treasury minister, admitted that “many scenarios were being considered”. He said it would “not be appropriate” to discuss the detail, but added he would be “guilty of not stepping up to the responsibilities of his office” if plans had not been made to cope with a default.

He said British banks had about £2.47billion in outstanding loans to Greek institutions and individuals.

Last night, after leaving a meeting with eurozone ministers in Luxembourg, George Osborne, the Chancellor, insisted that he did not want to see Britain dragged into providing money for a second bail-out.

The European Union and International Monetary Fund will send a team of specialists to Greece today to assess whether a new austerity plan involving tax increases, privatisations and spending cuts is sufficient.

Finance ministers will meet again next month to finalise the bail-out but there are growing calls for Greece to be allowed to default on its debts and leave the euro if necessary. Yesterday in his Daily Telegraph column, Boris Johnson, the Mayor of London, called for Greece to return to the drachma.

Some experts have forecast that a default would trigger another global crisis as banks refused to lend money to weaker eurozone countries.

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