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Pressure continues to build on Papandreou after confidence vote

Ap
Wednesday 22 June 2011 19:00 EDT
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The Greek Government survived a confidence vote but has barely a week to get new austerity measures passed by parliament to avoid a potential default.

European leaders breathed a sigh of relief but kept up the pressure on Prime Minister George Papandreou, who faces a vote on 28 June to push though more spending cuts, tax rises and asset sales. Fearing the financial chaos that any default would ignite, EU leaders promised Mr Papandreou additional funds to help the shrinking Greek economy to get back on its feet.

Greece's creditors, particularly its eurozone partners, are demanding that Mr Papandreou get parliamentary approval for €28bn (£25bn) in budget cuts and new taxes and for a €50bn sell-off of government assets by the end of June. Only then will they hand over €12bn in funds that Greece needs to avoid bankruptcy in mid-July.

A default could drag down Greek and European banks, endanger the finances of other weak eurozone countries such as Portugal, Ireland and Spain, and spark financial uncertainty across world markets.

The German Chancellor Angela Merkel warned that a default would have "completely uncontrollable" consequences, but said private creditors should voluntarily share the pain of a second Greek bailout.

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