Athens and Berlin in spat over funds

'Greece needs more time, not more money'
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Story highlights

  • Greek and German leaders wrangled publicly over Greece's plea for further assistance
  • Comes as an index of business activity in the eurozone contracted for seventh month

Leaders in Athens and Berlin wrangled publicly over how to deal with Greece's plea for further assistance as fears of a renewed eurozone recession mounted yesterday.

An index of business activity in the single currency area showed a seventh consecutive monthly contraction and an accelerating decline in output from Germany, the main engine of eurozone growth.

As the debt storm spreads Europe's leaders battle to save the eurozone

There was moderately better news from surveys in France, where service sector business activity was broadly stable for the second month running and manufacturers reported the slowest fall in output since April. However, Markit said the data still suggested a fall in GDP was "on the cards" for the French economy for the third quarter, after GDP was unchanged in the second quarter.

The data came as Antonis Samaras, the Greek prime minister, demanded an end to open speculation by European officials -- much of which has come from Germany -- about a Greek exit from the euro.

Speaking ahead of a visit to Berlin today, Mr Samaras said expulsion from the single currency "could become a geopolitical nightmare that would go beyond the borders of Greece".

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His government's latest €11.7bn plan to reduce its budget and undertake structural reforms would include "very aggressive privatisation moves that would be "much bigger than expected", he said.

But in an interview with Le Monde, the French newspaper, he said the current uncertainty made that impossible: "How can we privatise when, every day, European officials speculate publicly about a potential exit of Greece from the common currency? This has got to stop."

Calls by Mr Samaras, who also visits Paris tomorrow, for Greece to be given more time to implement his government's plan have received little encouragement from German leaders.

Wolfgang Schäuble, finance minister, said on German radio that there was "understanding" for Athens' predicament, but giving it more time was "not the solution", adding: "More time implies . . . more money."

Chancellor Angela Merkel, speaking as she welcomed François Hollande, the French president, for talks in Berlin yesterday evening, said Greece must "stick to its commitments" to meet conditions set down under its existing international €174bn bailout package.

The PMI data showed the index for the German economy at its lowest in more than three years. Output also fell again in the country's manufacturing sector, although the rate of decline eased.

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