Page last updated at 16:20 GMT, Thursday, 28 January 2010

Davos 2010: Greece denies a bail-out is needed

Greece's PM George Papandreou: "The European Union is not going to bail us out"

Greece's Prime Minister George Papandreou has denied speculation that it will have to be bailed out by the European Union (EU).

Reports have suggested that the EU will pump money to help Greece - whose public finances are in ruins.

At the World Economic Forum in Davos, he also said countries like his "are being used as the weak link, if you like, of the eurozone."

European leaders also denied that Greece would be kicked out of the euro.

"Nobody's going to be leaving the euro," Spain's Prime Minister Jose Luis Rodriguez Zapatero said.

"On the contrary, countries will be joining the euro in the future. The same is true for the EU. That is the best proof on how the EU has helped to guarantee stability."

A report in Le Monde suggested that the EU was considering bailing out Greece because the Hellenic nation's woes had shaken the euro.


European Central Bank President Jean-Claude Trichet said the pact had helped keep the 16 members of the eurozone from experiencing even more strain.


Mr Papandreou said that there had been a lot of "speculation" during the financial crisis and that people were against the euro had targeted countries like his in the bloc.

Greece's public debt stands at about 300bn euros ($419bn, £259bn).

He also denied a Financial Times report that said Greece had been asking China to buy up to 25bn euros of its debt to help secure its finances.

"Greece has clearly lost the markets' confidence and may now have to work much harder than other countries to regain it," Capital Economics said in a research note on Thursday.

Test for euro

But Mr Papandreou refused to blame the EU for the country's troubles.

"We Greeks see it as our problem to put our house in order," he said. "Greece blames itself, not the EU."

Mr Papandreou also floated the idea of having EU government bonds for all the members in the bloc.

The crisis is seen as the first test since the euro was created in 1999.

Greece, Spain, Portugal, Ireland and especially Italy together account for 40% of the eurozone's debt.

Their debt has ballooned as their countries have been battered by the financial crisis, while larger economies have had to spend huge amounts to bail out their key industries.

Since the financial crisis last year, many countries - including the UK, France and Germany - have risen above the EU's limits on public spending as a proportion of growth.

The EU's Stability and Growth Pact states that no nation in the bloc should have an annual budget deficit higher than 3% of its gross domestic product.

Greece aims to shrink public debt to 9.1% of overall economic output this year, down from 12.7% last year.

Mr Zapatero told attendees in Davos that Spain would meet this criterion again by 2012.

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