UK & World News
The latest UK & World news stories from the Press Association.
Default will cause chaos, warns PM
20:05, Feb 10 2012
Greece's future in the euro grew increasingly precarious as violence erupted on the streets of Athens and dissent grew among its lawmakers after European leaders demanded deeper spending cuts.
The country's beleaguered coalition government promised to push through the tough new austerity measures and rescue a crucial 130 billion euro (£109bn) bailout deal, as six members of the Cabinet resigned.
Prime Minister Lucas Papademos promised to "do everything necessary" to ensure parliament passes the new austerity measures that would slap Greeks with a minimum wage cut during a fifth year of recession.
"It is absolutely necessary to complete the effort that began almost two years ago to consolidate public finances, restore competitiveness and economic recovery," Mr Papademos told an emergency Cabinet meeting.
Debt-stricken Greece needs the bailout money before a 14.5 billion euro (£12.14bn) bond deadline on March 20 and strike a vital debt relief deal with bond investors.
He said the bailout and a related debt-reduction deal with private creditors would return Greece to growth next year, and deliver 4.5% primary surplus in 2012 - better than an earlier official prediction of 1.1% of gross domestic product.
"A disorderly default would cast our country into a catastrophic adventure. It would create conditions of uncontrollable economic chaos and social explosion," he warned.
"Greeks' standard of living in the event of a disorderly default would collapse, and the country would be swept into a deep vortex of recession, instability, unemployment and penury. These developments would lead, sooner or later, to exit from the euro."
Earlier, a small right-wing party in Mr Papademos' coalition said it would not back the new measures and four of its officials in the cabinet resigned, including the country's transport minister. Two Socialists cabinet members have also quit.
Violent clashes broke out in front of parliament earlier amid mass protests organised by unions, which launched a 48-hour general strike.
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The latest UK & World news stories from the Press Association.
