July 13, 2011
A new rescue plan for Greece being negotiated by Europe's policy-makers is likely to cost twice as much as previously expected if it is agreed, EU officials have signalled as fears grew in the financial markets for the fate of the euro single currency.
Senior EU officials admitted that the cost of bailing out Greece and slashing its debt levels would add tens of billions to the loans granted by the eurozone countries while Willem Buiter, a former member of the Bank of England's monetary policy committee, warned that the eurozone was facing an "existential" moment .
Buiter, now chief economist at Citigroup, said the contagion had clearly spread beyond the three small countries granted financial assistance: Greece, Portugal and Ireland.
"We're talking a game changer here, a systemic crisis," he said. "This is existential for the euro area and the EU."
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