Commissioners at odds over planning for Greek euro exit

Commission Vice President Olli Rehn’s assurances contradict what his colleague the trade commissioner said earlier in a newspaper interview.

Karel De Gucht told Belgian newspaper De Standaard that “there are in the European Central Bank, as well as in the commission, services working on emergency scenarios if Greece shouldn’t make it”.

He added: “A Greek exit does not mean the end of the euro, as some claim.”

In an interview with Channel 4 News, Mr Rehn said: “We are not preparing for any Greek exit.” When asked why not, he said: “I’m not commenting on any scenario planning or anything like that.”

Mr De Gucht’s comments appear to be the first time an EU official has acknowledged that contingency plans are being drawn up in case Greece leaves the single currency.

We are not preparing for any Greek exit. I’m not commenting on any scenario planning or anything like that. Olli Rehn, EU Commissioner

Downgrade

The turmoil in the eurozone was reflected on the markets on Friday, following the ratings agency Moody’s decision to downgrade 16 Spanish banks, including the British arm of Santander.

A spokesman for Santander UK reassured customers that it was “completely autonomous” from its parent firm, adding that “money raised in the UK stays in the UK”.

An audit of Spain’s banks is to be carried out in the hope of reassuring investors worried about bad loans.

No end

In the short term, there is no end in sight to what is happening in heavily indebted eurozone countries. German Finance Minister Wolfgang Schaeuble said on Friday that market jitters would last another 12-24 months.

Ahead of his first meeting with newly inaugurated French President Francois Hollande at the G8 summit, David Cameron said events in the eurozone were “truly worrying” for Britain.

He told ITV1’s Daybreak: “That’s why yesterday as well as saying I will keep Britain safe, I was saying we’ve got to do more to persuade the eurozone countries to take the really decisive action to deal with the problems that they’ve got.”

Greece is reliant on bailout funds from the EU and IMF and in return has agreed to implement an austerity programme that involves big cuts in government spending and tax increases.

Nerves

Nervousness across the rest of the eurozone has increased since elections in Greece on 6 May which saw a rise in support for anti-austerity parties.

Greece has been unable to form a conventional government since then and voters will go to the polls again on June 17. If anti-austerity parties succeed again and refuse to continue with the EU and IMF cuts, Greece could be left to fend for itself without bailout money, making an exit from the euro even more likely.

Wolfgang Schaeuble said: “It’s up to Greek politicians to explain the reality to their people and not make false promises. There are too many Greek politicians who say that Europe is the cause of their problems. It’s not true. We want Greece to stay in the euro but meet its commitments and that’s a decision that’s up to the Greeks.”

The G8 summit in Washington is likely to be dominated by the eurozone. On Thursday, Mr Cameron told other European leaders during a conference call that eurozone countries needed to take “decisive action”.

Read Gary Gibbon's blog: Cameron speech - going down like cold moussaka