EU's Almunia: "Serious risk" of Greek crisis spreading to others

Feb 9, 2010, 14:36 GMT

Strasbourg - There is a 'serious risk' that the financial crisis hitting Greece may spread to other euro zone countries, the outgoing European commissioner for economic affairs, Joaquin Almunia, told the European parliament on Thursday.

Greece's ballooning budget deficit, set to reach 12.7 per cent of Gross domestic product (GDP) in 2009, over three times the 3 per cent level allowed by the EU, sparked fears of a default within the eurozone.

'The commission is concerned about the substantial economic and fiscal challenges Greece faces (...) they are a common concern for the euro area and for the EU as a whole,' Almunia said during a debate held in Strasbourg, France.

According to the former Spanish minister there is 'a serious risk of spill-over to other parts of euro area.' But Almunia did not mention any specific country.

The commissioner said the Greek government's austerity plan - approved by the commission last week - 'displays an ambitious degree of ambition,' but is also founded on some optimistic assumptions.

To make sure Athens delivers on the promise to bring its deficit within the 3 per cent target within 2012, the commission set up a strict monitoring regime that may force Greece to take additional budgetary measures.

'We are living in an unprecedented situation but we are facing it,' Almunia said, expressing his belief that reforms 'will put Greece back on a sustainable path.'

As a new European Commission was approved Tuesday, Almunia is set to leave economic affairs to take on the competition portfolio. He will be replaced by Olli Rehn from Finland, who was enlargement commissioner in the previous EU executive.