Struggling Eurozone Braced For More Bad News

Europe’s leading economics official is poised to issue his assessment of the euro’s health only hours after France and Germany insisted that stricken Greece remains an “integral” part of the single currency. Olli Rehn, the European Union’s economic monetary affairs commissioner, is expected to cut his forecasts for economic growth in the zone in the European Commission’s latest forecast as the debt crisis gripping the region threatens to spread.Addressing the European Parliament on Wednesday, Mr Rehn said Greece’s place was firmly within the eurozone.“Let me say a word to those suggesting that Greece would be better off outside the euro. I very strongly disagree,” he said.”Neither Greece nor the eurozone would be better off.”Whatever way you look at it, it is absolutely certain that a default and/or exit of Greece from the eurozone would carry dramatic economic and social and political costs, not only for Greece but also for all other euro area member states and EU member states, as well as for our global partners.”His comments came as Nicolas Sarkozy, Angela Merkel and Greek prime minister George Papandreou held an emergency phone summit.

They said the additional austerity measures Athens announced recently would ensure the country achieved its fiscal targets.In a joint statement after the phone conference, the French and German leaders said: “Putting into place commitments of the (bailout) programme is essential for the Greek economy to return to a path of lasting and balanced growth.”In Britain, Number 10 is drawing up contingency plans to protect the UK from the instability in the eurozone.

Athens has warned it will run out of cash in a few weeks’ time and needs 8bn euros next month to pay wages and pensions.Italy is also under pressure, and its Parliament passed a crucial 54bn euro austerity package on Wednesday night leading to street protests in Rome overnight.There are fears the debt crisis could spread outside the eurozone, with international leaders also expressing alarm.China and the Bric countries Brazil, Russia, India, China and South Africa are holding talks on the possibility of increasing their holdings of European debt, while US President Barack Obama has said the eurozone needs better fiscal coordination. – Skynews