Page last updated at 23:48 GMT, Monday, 7 December 2009

Greece warned about credit rating

George Papaconstantinou, Greece's finance minister
Greece's finance minister has acknowledged concerns about the country's debt

Concerns about Greece's economy have continued to grow as the country has been warned it may have its credit rating cut.

The ratings agency Standard & Poor's has put Greece on negative credit watch, saying deteriorating public finances raised concern about its debt.

The Mediterranean country's debt stands at more than 110% of GDP.

Separately, the president of the European Central Bank (ECB) said Greece needed to take "courageous" measures.

"The situation in Greece is very difficult," ECB chief Jean-Claude Trichet told the European Parliament's economic committee.

"So this calls for very difficult, very courageous but absolutely necessary measures."

Greece's new government has acknowledged growing fears about its ability to pay its debts, fuelled by Dubai's financial problems.

Finance Minister George Papaconstantinou has said the government is working to correct a "lack of credibility" in the financial markets.

Markets are worried about the vulnerability of government bonds following comments from Dubai's government minister that it would not guarantee troubled property firm Dubai World's debt.

Governments and companies issue bonds to raise money on the financial markets.

Standard & Poor's said it was considering downgrading Greece to reflect its view that "the fiscal consolidation plans outlined by the new government are unlikely to secure a sustained reduction in fiscal deficits and the public debt burden".

The agency also cut Portugal's outlook to negative from stable.

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