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Page last updated at 08:53 GMT, Thursday, 11 February 2010

Eurozone leaders 'will bail Greece out'


European Union leaders are to meet in Brussels today to discuss ways to rescue Greece from a financial crisis that is threatening to undermine the European single currency.

Jackie Davies a senior adviser to the European Policy Centre, told the Today programme that today's meeting would "attempt to send a really clear signal to the markets that if necessary other eurozone countries are prepared to step up to the plate and provide some sort of rescue package - a bail-out - for the Greeks".

She added that this would not be a detailed rescue plan but a gesture of solidarity "to try to calm the markets" in what she called "a huge test of the eurozone's credibility".

But the former chancellor Lord Lamont, who withdrew the UK from the European Exchange Rate Mechanism in 1992, said that any EU bail-out of Greece would be illegal under the Maastricht Treaty which led to the setting up of the Euro.

Greece has come under increasing pressure from financial markets to curb its deficit, which has been swollen by the global economic crisis.

Its government is looking to slash expenditure and increase taxes to reduce its 12.7% deficit, which is more than four times the level permitted in the eurozone, prompting a nationwide strike yesterday.

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