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February 3, 2010    

European Commission confirms support for Greece

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by Kay Murchie
European Commission confirms support for Greece

The European Commission has met today to discuss Greece’s tough austerity measures which will see the weakest economy of the euro zone tackle its spiralling debt.

The Commission confirmed it will support the country’s plans which include a public sector pay freeze and a hike in fuel taxes.

However, the European Commission will closely monitor progress and has demanded an interim report by mid-March.

EU economic commissioner, Joaquín Almunia, welcomed the fiscal measures taken by Greece and said: “We consider that the programme is ambitious, and that the programme in terms of targets is achievable.

“We are endorsing the Greek programme. But at the same time we know that the implementation of the programme is not easy. It is difficult. This deserves support.”

Greek Prime Minister, George Papandreou, is also urging the public and his political rivals to support his austerity programme.

“Our country is at the centre of a speculative attack. It is being treated as the weak link of the euro zone,” he said.

“We must act in an imminent and efficient manner and it is for that reason that I called on the political parties to support this national effort,” he said.

Greece’s runaway budget deficit is currently more than four times the EU limit of 3%.

It currently has the highest debt of the 16-member euro zone and its economy is considered to be the euro zone’s weakest. Its debt currently stands at €300 billion (£259 billion) and there has been much speculation that the European Union will have to inject funds into its economy.

However, speaking at the World Economic Forum in Davos last week, Mr Papandreou denied speculation that it will have to be bailed out by the EU.

However, there are concerns that if Greece is not rescued by wealthier countries, investors may start to lose confidence in other European member states.

Many economists believe that Greece should seek an International Monetary Fund (IMF) loan but euro zone countries argue that the EU can handle the matter without intervention from the IMF.

Mr Almunia has also dismissed concerns that Greece’s debt problems could jeopardise the single European currency.

In related news today, Eurostat revealed retail sales in the euro zone were unchanged in December from January.

The figures disappointed analysts who had expected a 0.4% rise in which is traditionally the busiest month of the year for retailers.

The latest figures highlight the fragile state of the economy and weak consumer demand.

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