Good morning, and welcome to our rolling coverage of the eurozone debt crisis.

Coming up today – economic data that will show whether the eurozone economy is now officially contracting. Data from Germany and France has already been released in the last hour – showing that the German economy shrank, but French GDP surprisingly increased.

Greece will still dominate today, even though eurogroup finance ministers have cancelled their planned meeting for this evening. Instead, they will just discuss the situation on the phone.

The meeting was ditched because Greece has not yet found the missing €325m in spending cuts, and Antonis Samaras of the New Democracy party has not signed a letter promising to implement the reforms. Will he sign today?

And even if he does, will that be enough?

There's a busy morning ahead -- with eurozone GDP, UK unemployment and the Bank of England's quarterly inflation report all coming up. Here's the agenda

• Italian GDP for Q4 2011 - 9am GMT

• UK unemployment data - 9.30am GMT

• Eurozone GDP for Q4 2011 - 10am GMT / 11am CET

• BoE quarterly inflation report - 10.30am

• Eurozone finance ministers conference call - 5pm GMT

The surprising news this morning is that the French economy grew by 0.2% in the last three months of 2011, defying predictions that it would shrink by 0.2%. The figures have been warmly welcomed by finance minister Francois Baroin, who declared:



Each of the three main components of the economy -- foreign trade, household consumption and investment -- had a positive contribution in the last quarter of 2011. This strengthens the government's forecast for 0.5% percent (growth) this year.

Speaking of France, it appears that Nicolas Sarkozy has joined Twitter this morning, using @nicolassarkozy. Interesting timing – he's expected to kick off his re-election bid tonight.

German GDP fell by 0.2% in the last three months of 2011, according to its Federal Statistics body this morning.

Trade and private consumption both fell during the quarter, which might dent claims that Germany is immune from the eurozone crisis. However, the data was still slightly better than analysts had expected.

Christian Schulz of Berenberg Bank blamed the eurocrisis for hurting the German economy – retail sales and industrial production both suffered.

Arnd Schäfer of WestLB suggested that German consumers had cut back last November when the debt crisis was raging (that was the month in which the prime ministers of Greece and Italy were both replaced).

Economists are generally confident, though, that Germany will return to growth in this quarter – thus avoiding a technical recession.

Just in from Italy -- it is cutting its order for F-35 strike fighters by 40 planes, out of an original pledge to buy 130 of the jets.

As we flagged up yesterday, this is part of Mario Monti's attempts to repair Italy's budgets and maintain the confidence of the financial markets.

Defence minister Giampaolo Di Paola said the move was "coherent with our need to reduce spending".

This makes Italy the latest in a series of countries to cut their orders for the next-generation, air-to-ground, radar-evading fighter plane. The Pentagon has trimmed its own order three times. In the new age of austerity, such expensive military hardware becomes harder to justify.

Today's UK newspapers are in broad agreement – Greece is heading towards default, with Europe's patience over its second bailout now all but exhausted.

As my colleagues Ian Traynor and Helena Smith wrote:

Among policymakers, there is a mounting sense of resignation that Greece is unable to meet its side of the bargain to facilitate the bailout, as well as a growing confidence that the eurozone is now in a much stronger position to weather a Greek default than when the crisis erupted two years ago.... ...European exasperation has been fuelled by the consistent failure of Greek leaders to supply details on how a €325m funding gap is to be closed and by the same politicians, particularly the centre-right leader, Antonis Samaras, refusing to guarantee in writing that the deal cannot be revised following elections in April.

The Financial Times reports that there are divisions at the heart of Europe over whether to simply allow Greece to default:

A group of eurozone governments, particularly those that retain triple-A credit ratings, has lost faith Greece will ever deliver its end of the bargain. Hardline officials in Germany, the Netherlands and Finland are increasingly urging a Greek default. "We are getting closer to default," said a senior eurozone official. "Germany, Finland and the Netherlands are losing patience."

In the Daily Telegraph, Ambrose Evans-Pritchard warned that the EU is forcing a "final catharsis" on Greece:



The country appears to be in a self-feeding downward spiral that is playing havoc with budget targets, leaving Greece with a Sisyphean task of ever deeper cuts.

Profits at French bank BNP Paribas have been hit by the eurozone crisis. It reported this morning that net earnings halved in the last quarter of 2011, partly due to writedowns on its Greek bonds.

BNP Paribas has cut the value of its Greek sovereign bonds by 70% – in line with the haircut that will probably be taken by Athens' creditors.

But at €765m, its earnings were better than City analysts had expected. There's a good write-up on Businessweek.

Breaking -- Italy has tumbled back into recession.

Italian GDP fell by 0.7% in the last quarter of 2011 , even worse than the 0.5% contraction expected by City analysts. It follows a 0.2% decline in the third quarter, so Italy has now been shrinking for six months.

The Netherlands has also fallen back into recession. Like Italy, it shrank by 0.7% in the last three months of 2011, following a 0.4% contraction in Q3.

Reuters is reporting that Antonis Samaras will sign the letter promising to enforce Greece's austerity measures.

It quotes a New Democracy source who said "the letter will be dispatched within the day".

In time for tonight's eurozone finance ministers meeting?

This may reassure German finance minister Wolfgang Schäuble, who told German radio this morning that he was very alarmed about whether Greek politicians would stick to the cutbacks.

Schäuble said:

When you look at the internal political discussions in Greece and the opinion polls, then you have to ask who will really guarantee after the elections – and I find that very alarming – that Greece continues to stand by what we are now agreeing with Greece.

Schäuble also pointed the finger at Athens political establishment for the country's economic woes:

I am also not yet sure that all political parties in Greece are aware of their responsibility for the difficult situation their country is in.

UK unemployment data is out, showing another rise in the number of people out of work and claiming benefits.

The claimant count rose by 6,900 in January to 1.605 million, the highest level since January 2010.

The wide ILO measure found that the number of people officially unemployed was 2.671 million in the three months to December, up from 2.622 million in the previous quarter (but lower than the total in the three months to November).

Vicky Redwood of Capital Economics said the key point is that unemployment is still rising, and is likely to rise "much further" in the months ahead.

Another blow to the UK government? My colleague Andrew Sparrow will be tracking all the political reaction to the unemployment data in his Politics Live blog today.

It's official – the eurozone shrank in the last three months of 2011, by 0.3%.

Eurostat also reported that the eurozone economy grew by just 0.7% during 2011 as a whole, as the debt crisis took hold.

There are some alarming differences between different members of the Eurozone, with Italy and the Netherlands now officially back in recession.

Here's a summary of today's data:

Germany - GDP fell by 0.2% in Q4

France - GDP grew by 0.2% in Q4

Italy - GDP fell by 0.7% in Q4.

The Netherlands - GDP fell by 0.7% in Q4.

Portugal - GDP fell by 1.3% in Q4

This table of quarterly GDP shows how the eurozone slowed during 2011, and finally began to contract.

Q1 2011: +0.8%

Q2 2011: +0.2%

Q3 2011: +0.1%

Q4 2011: - 0.3%

Previously, the eurozone economy had not contracted since the second quarter of 2009.

Is the eurozone heading into recession? Howard Archer, economist at IHS Global Insight fears so. Here's his response to this morning's GDP data:

The Eurozone stuck one foot back through the recession door in the fourth quarter of 2011. Despite some recent improved Eurozone surveys and evidence that Germany is returning to growth, we doubt that the Eurozone will be able to avoid further contraction in the first quarter and very possibly the second as well in the face of tighter credit conditions, a further tightening in fiscal policy in many countries, the ongoing pressures facing consumers (high and rising unemployment, and still squeezed purchasing power) and limited global growth. Meanwhile, the Eurozone sovereign debt crisis is likely to continue to weigh down on confidence and fuel uncertainty, thereby holding back business investment.

Sir Mervyn King, governor of the Bank of England, has confirmed that Britain has drawn up contingency plans for a Greek default.

At a press conference to discuss the Bank of England's new quarterly inflation report, King refused to go into details, telling reporters:

As you would expect, the government and the Bank together have been discussing a range of policy options and devising contingency plans.

The governor also warned that Britain's GDP growth, and contraction, will probably fluctuate in 2012 due to the effect of the Jubilee Holiday (marking Queen Elizabeth's 60 years on the throne).

So there'll be two QE2's on the governor's agenda this year.....

King also warned savers not to expect interest rates to rise anytime soon. Raising borrowing costs would be a huge mistake, he argued:

It would turn a gradual recovery into a recession, with higher unemployment, and would cut the value of assets on which savers depend.

Mervyn King, Bank of England governor, went on to warn that the eurozone crisis remains the biggest threat to the UK economy.

He predicted (at today's Bank press conference) that it will be the top item on the agenda when the G20 meets in Mexico, but admitted that there is not much that anyone can do about a future eurozone disaster until it happens.

Larry Elliott, our economics editor, is attending the Bank of England press conference on the quarterly inflation report. Here's Larry's early take:

Mervyn King is happy to see inflation fall but still gloomy about outlook for UK. He says there are challenging times but expects slow recovery this year. The Bank does not expect a double dip recession, but warns that the path of recovery will be slow and uncertain. That "zigzag" pattern of growth suggests there may be further quarters of negative growth. King warns that a painful adjustment is still, and there are no easy answers. But the governor believes that the UK moving in the right direction, so is slightly less gloomy than previously. While the biggest threat to UK is still crisis in the eurozone, other upside risks include the danger of an oil shock from Iran.

On inflation, the Bank raised its forecast for CPI in the medium-term (in two year's time) to around 1.8%. That's closer to its 2% target than previously.

You can see the full report here.

Exciting developments in Athens -- Greece's finance minister has blasted Europe for "playing with fire" over his country's future.

Evangelos Venizelos insisted that Greece will have solved the few outstanding issues in time for this afternoon's conference call:

Venizelos told reporters that:

There are only a few remaining issues, which will be fully clarified by the time of the Eurogroup conference call at 6pm Greek time (4pm GMT).

According to Reuters, Venizelos said certain EU countries were now trying to shove Greece out of the eurozone altogether [an issue we touched on at 8.38am).

Sounds like Athens is preparing to face Brussels down....

Antonis Samaras – the leader of the centre-right New Democracy party – has committed himself in writing to the reform programme. That, of course, is one of the key demands from Greece's intenational lenders.

However, he still wants the measures to be changed, to put more emphasis on economic growth

Helena Smith, our correspondent in Athens, can confirm that the letter, written in English, has just been translated into Greek. It is about to be sent to the country's troika of creditors, the EU, ECB and IMF.

One of Samaras's top advisers told Helena:

The letter has just gone. We have no problem expressing committment to a stabilisation progam. We are all for eliminating the deficit, controlling the debt and going on with the privatisation program things that right from the beginning we proposed. It [the letter] makes very clear that we have full respect for the long-term objectives, targets and key policies of the programme.



However..... the adviser revealed that New Democracy still wants the plan tweaked.

We also said we should modify the plan to allow for prompt [economic] recovery. We don't want to make recovery a top priority but we insist that it becomes an additional priority, that it be be applied in tandem with other policies to allow the economy to breath. Is this such an irrational, stubborn view when the [rescue] plan to date clearly hasn't worked?"





As the programme currently stands, the adviser said, it was a "recipe for failure" plunging Greece into ever deeper recession:

It's not because the objectives are wrong. From the beginning we agreed with them. But there is a missing ingredient.



After two years of austerity the country's overall debt had jumped from 115% of GDP to 166% of GDP. That is proof that the programme had failed, argues New Democracy, which is widely tipped to win upcoming elections in April.

Samaras's adviser continued:

Even if it was perfectly implemented the numbers didn't add up. We are not saying that we are against austerity but we have to change the mix and allow for recovery. We are feeling a little embarassed that again and again they want us to show our committment to the plan. When we say prioritize recovery we mean we want to discuss it with them, not do anything unilaterally. Even if they allowed us to do whatever we wanted to do we would still stick to the programme.

Europe's patience may be wearing thin but as we noted earlier (11.18am) so is Greece.

Evangelos Venizelos, the finance minister, was in particularly bullish mood when he emerged from talks with the country's head of state president Karolos Papoulias. Here's his full quotes (via Helena Smith):

Our country is waging a battle of survival within the euro zone - a battle of social conhesion and national dignity. However we are in a peculiar situation becase we continually have new terms, new conditions. This is because, manifestly, there are now forces within Europe that are playing with fire because they believe the [loan agreement] will not be implemented ... and who consequently have prepared and want Greece out of the euro zone. This has to be understood here in Greece by all political and social forces. We have to rally so as not to give anyone the excuse or alibi to enforce such a scenaro, a frightening scenario not only for Greece but for the world economy.

Venizelos added that he told president Papoulias that Greece must choose between "unpleasant and even more unpleasant solutions."

Greece's president is giving up his salary, worth almost €300,000 [CORRECTED] per year, in a sign of solidarity with the country's citizens.

Karolos Papoulias's decision came as he met with finance minister Evangelos Venizelos in Athens this lunchtime. Papoulias asked to be relieved of his salary "as a symbolic gesture when the Greek people were being called to make such sacrifices."

Helena Smith explains:

Although the post is mostly ceremonial, Greek presidents are paid in the range of €300,000 a year

We believe this is the first time in the country's history that a president has given up his salary.

CORRECTION: We wrongly reported that Papoulias's salary was €400,000, rather than €283,694, due to a currency error. That means he does not, as we said, earn more than Barack Obama. Apologies.

Reuters is snapping that New Democracy has released a statement officially confirming that Samaras has signed the austerity pledge (as Helena reported at 11.21am).

Here's the key line from the letter which New Democracy's Antonis Samaras has signed and dispached to the Troika:

If Nea Demokratia wins the next election in Greece, we will remain committed to the Program's objectives, targets and key policies as described in the MoU/MEFP.

(MoU = memorandum of understanding, MEFP = Memorandum of Economic and Financial Policies).

Greece is also caught up in another gripping international issue – the growing tensions between the West and Iran.

Iran Iranian state media announced today that it has stopped oil exports to six EU countries -- Netherlands, Greece, France, Portugal, Spain and Italy.

This is a tit-for-tat move in response to the EU's decision to stop importing crude from Iran from July this year, because of concerns that Iran is developing a nuclear bomb.

3pm UPDATE: Tehran has now denied thiese reports – the Oil Ministry says IT will announce any export bans.

Greece's energy suppliers have had earlier moved swiftly to deny speculation that Greece's oil tanks could run dry. Its largest refiner, Hellenic Petroleum, insisted that it can find fresh supplies.

The EC says it has 120 days worth of oil on tap, so local shortages could probably be addressed.

Greece's power situation is rather interesting, though. It can't currently import electricity from Bulgaria because coal deliveries to some Bulgarian power stations were halted in the bad weather.

And, according to local reports, there are fears of gas shortages too – again, due to inclement weather.

natural gas company also on alert as shortages reported along supply network because of recent bad weather in #greece — Diane Shugart (@dianalizia) February 15, 2012

Just in – Reuters is reporting that European officials are considering delaying Greece's second bailout until April, after the general election.

Here's the story, by Luke Baker and Jan Strupczewski

Euro zone finance officials are examining ways of delaying parts or even all of the second bailout programme for Greece while still avoiding a disorderly default, several EU sources said on Wednesday. Delays could possibly last until after the country holds elections expected in April, they said. While most of the elements of the package, which will total 130 billion euros, are in place, euro zone finance ministers are not satisfied that Greece's political leaders are sufficiently committed to the deal, which requires Athens to make further spending cuts and introduce deeply unpopular labour reforms.

The euro has plunged by around a cent against the dollar on this report -- hitting $1.306.

According to Reuters, Germany, Finland and the Netherlands are leading the push to delay Greece's bailout until April [see 1.18pm], even though the country must repay €14.5bn of maturing debt in March.

Their plan is for Greece to finalise its debt negotiation deal with its creditors (the Private Sector Involvement), which will trim €100bn off its debt pile. That would provide the resources to deal with March's debt repayment.

Of course, private creditors might be less willing to take a haircut on their bonds if Europe hasn't stumped up its portion of the deal. In that instance, the whole package would have to be rolled over to April – and the rest of the eurozone might pick up the bill in March.

Reuters explained:

This would mean we have to pay the €14.5bn on March 20, which would be a total waste," said the euro zone source, who took part in discussions among deputy heads of euro zone finance ministries on Tuesday.

Another unacceptable interference in Greek democracy. That's how Nick Malkoutzis, the deputy editor of Greek newspaper Kathimerini, sees Europe's reported threat to postpone Greece's bailout until after April's general election.

Malkoutzis believes that Europe is signalling to Greek voters that only a government led by New Democracy or Pasok is acceptible (because their leaders have pledged to enforce austerity). On Twitter, Malkoutzis said the reports left a "very bad taste".

If #eurozone makes this demand, it's unprecedented interference in another country's democratic process. This is all leaving v bad taste. — Nick Malkoutzis (@NickMalkoutzis) February 15, 2012

And Michael Hewson of CMC Markets warns that Greece's private creditors would be less likely to take part in the country's debt restructuring deal, because they would have "no guarantee about the rest of their holdings if funds are withheld and Greece then defaults."

Mario Monti, Italy's technocratic PM, has told the European Parliament that Germany and France must share the blame for today's crisis.

Monti reminded MPs that Europe's two biggest economies both breached Europe's original fiscal pact, the Stability and Growth Pact (SGP), in the run-up to the crisis.

Monti also offered Greece support, warning that EU states must not be divided into "good" and "bad". He also reiterated his support for euro-bonds, saying they would help to stabilise Europe.

Speaking of the European Parliament…the British Conservative party's leader in the EP has called for Greece to default on its debts and leave the euro.

Martin Callanan said the next EU summit, scheduled for 1 March, should simply concentrate on preparing for the country to drop out of the eurozone.

Callanan said:

Nobody believes that the latest package will save Greece. Even if all the measures agreed on Sunday night are implemented - and that looks increasingly unlikely - then by 2020, after eight more years of grinding austerity, Greece would still be in a worse position than Italy is now ... All the energy currently being devoted to drafting and ratifying a new treaty that is irrelevant to the ongoing crisis would be better employed drafting and implementing a plan for the orderly withdrawal of Greece from the euro, including carefully prepared support for the banks that will be most affected. That is the sustainable solution - everything else is just a very expensive exercise in kicking the can down the road.

That's via Andrew Sparrow's Politics Live blog.

The UK coalition government, of course, strongly argues that the eurozone must embrace closer fiscal union to save Greece. The word from insiders is that every study into eurozone break-up conducted by the Treasury finds that it would be a disaster for the UK. Thus, David Cameron cannot yield to the demands of his eurosceptic colleagues.

The World Bank has announced that its president, Robert Zoellick, will leave the organisation on 30 June.

The announcement, which isn't a huge shock, is likely to trigger a hectic scramble to replace Zoellick. The suspicion is that America will maintain its grip on the position (in return for Europe's equally controversial hold on the International Monetary Fund). That suggests that Hillary Clinton, or Larry Summers, could take over.

However, will emerging markets accept another Western carve-up, at a time when they are being invited to provide financial support for the eurozone?

Here's a round-up of City reaction to the developments in Greece today:

Ben May of Capital Economics:



Developments on Wednesday left the deal over Greece's proposed bail-out still hanging in the balance.... Greek politicians conceded a bit of ground. Antonis Samaras, head of the main opposition party, sent a letter to the troika committing to the terms of the proposed bail-out package – a key condition of the bail-out. Previously he has suggested that his party would seek to re-negotiate the second bail-out package after the April's likely general election. But by stating that "policy modifications might be required to guarantee the full programme's implementation" he perhaps has not completely ruled out trying to reopen the rescue deal further down the line.

Mike McCudden, head of derivatives at Interactive Investor

Although previously being vocal on his desire to renegotiate the terms of the Greek bailout, news that Conservative leader Antonis Samaras is now willing to pledge his commitment to the austerity measures, may be giving investors some degree of comfort, but this story has now by and large ran its course. The general consensus amongst traders is that Greece will inevitably default and exit the Eurozone at some point.

William Poole of FC Exchange:

Markets seem prepared to give leaders the benefit of the doubt for now, however if something concrete is not accomplished soon, conditions could soon intensify rapidly. Just imagine though, all the delays and postponements actually being a sneaky tactic to engineer a Greek exit, and begin the rebranding of euro notes as "Drachma euro"?

A global coalition of campaigners has called for an open and merit based process to elect the next World Bank leader, following the news that Robert Zoellick is stepping down (see 3.31pm).

The group, which includes British charity Oxfam, demanded an end to the 'gentleman's agreement' which means the World Bank is run by an American, and the IMF by a European.

Elizabeth Stuart of Oxfam argued that as the World Bank's job is to help emerging markets, they should have a proper say:

The way the World Bank picks its president needs to change. The bank only operates in developing countries, so any candidate not supported by a majority of these countries would plainly lack legitimacy.

The campaigners want a one-country, one-vote system, rather than the current system based on 'voting shares' (which gives the US an effective veto over the process).

Collins Magalasi of African charity Afrodad said:



It's a World Bank, not a US Bank. It needs the best candidate to get the job with support of wide Bank membership, not just the US.

PS - obviously this isn't directly related to the eurocrisis. But when we asked for feedback about covering the crisis better yesterday, some readers requested a wider focus on international issues. So this is a start.

The FT's Brussels Blog this afternoon has a fascinating romp through leaked documents from the EU that show how the Greek bailout is unravelling.

Peter Spiegel reports that EU officials have turned to City firm Lazard after realising that there's a nasty (and growing) possibility that the Greek debt restructuring could collapse while the swap is underway.

The whole piece is well worth a read. But in summary,

1) Eurozone officials fear that the whole Greek deal could collapse because European parliaments will not approve it in time to get the PSI (private sector involvement) bond swap finalised, before the March 20 deadline (when Greece must repay €14.5bn). The cancellation of last night's meeting means that parliaments cannot start considering the process tomorrow, as hoped.

2) This means that bondholders would have to decide whether to take a haircut and swap their existing Greek debt for new, long-term bonds (including some from the European Financial Stability Fund), without Europe having agreed its share of the deal.

As Lazards points out:

We would expect this uncertainty to reduce the chances that the offer succeeds. Greece would in effect be asking creditors to commit the tender their Greek government bonds and to block them for a period of as long as three weeks without having any assurance that Greece will be able to deliver the EFSF notes that it needs to deliver to close the exchange.

And should the deal unravel, and the swap is squashed, creditors might find it hard to 'un-commit' their bonds.

What a mess. And it also provides some more context for this afternoon's Reuters story about the EU considering delaying the bailout until April. If the FT is right, they may not have a choice.....

One small piece of good news for Greece – despite the turmoil in the country, British holidaymakers don't appear to be shunning the country.

Research released today showed that the number of people planning to visit Greece inched up to 9% in February 2012, from 8% in February 2011. And one holiday website reported that booking enquiries regarding a Greek vacation were 32% higher in January 2012 than the previous year.

More details on our Money site.

Somewhat anecdotal, of course, but it might offer Greece some comfort – especially after TUI Travel reported a 27% drop in flights to Greece from Germany last week.

Billionare hedge fund manager John Paulson has added his voice to those predicting that the euro will ultimately collapse – perhaps triggered by a Greek default next month. He also suggests that the ramifications would be "bigger than Lehman's".

Paulson wrote to investors in Paulson & Co that:

We believe a Greek payment default could be a greater shock to the system that Lehman's failure, immediately causing global economies to contract and markets to decline.

Paulson isn't infallible, of course. He did make billions of dollars betting on a subprime mortgage collapse, but suffered heavy losses in recent months after selling large stakes in Citigroup and Bank of America for a loss, before their value climbed.

Wondering what would happen if Greece defaults? As Sir Mervyn King explained this morning, contingency plans are in place…but he wasn't keen to discuss them.

Officials in Europe are also reluctant to explain what would happen. Still,

my colleagues Ian Traynor and Heather Stewart explain here what would occur if Greece quit the euro. They include:



Capital controls in Greece - limits on the amount of money that can be taken in and out of the country – while it implemented "drachmatisation". All balances at Greek banks would probably be redenominated at a fixed exchange rate with the new (or rather the old) currency; but banks could be shut, or strict limits placed on withdrawals from cash machines, while the details were worked out. In the UK, The Foreign Office would have to think about how to bring home Britons trapped in Greece without enough funds to get out, And banks which still holding Greek bonds would face losses.

The Greek situation lingered over the Loindon stock market today, as the FTSE 100 failed to match gains in France (up 0.5%) and Germany (up 0.6%). The blue chip index finished just 7 points lower, with traders concerned by reports reports that Athens' bailout might be delayed. Julia Kollewe has more details here.

Be careful what you wish for, Europe.

That's the message from Fathom Consulting, which warns that a Greek disorderly default is increasingly likely. But if certain countries have decided to drive Greece out of the eurozone – as Evangelos Venizelos claimed today, then the consequences could be more severe than they expect.

Fathom warned this evening that:

A consensus seems to be emerging among European policy makers that a Greek exit, although painful, would be containable. We disagree. A Greek exit would, in all probability, precipitate a collapse of the entire single currency.

It adds that the Bank of England's latest forecasts don't include this 'material risk', suggesting that "a more comprehensive assessment of the outlook for UK growth must surely lie someway south of the figures presented by Governor King this morning."

Greece's president launched a fierce defence of his country this afternoon, singling out Germany for criticism over the way Europe's biggest state has approached the crisis.

Karolos Papoulias, fresh from surrendering his salary as a sign of solidarity, took particular aim at Germany's Wolfgang Schäuble for his recent comments that Greece must 'surrender some of its sovereignty'.

Papoulias made his comments at Greece's ministry of national defence – which meant that his attack was made before a backgroup of Greek soldiers. Read into that what you will.

Here's Papoulias remarks:

We all have an obligation to put our shoulder to the wheel in order to overcome the crisis. I cannot accept that my country should be reviled by Schäuble. I cannot accept this as a Greek.

He went on...



Who is Mr Schäuble to insult Greece? Who are the Dutch? Who are the Finnish?

Here's another picture of Karolos Papoulias, Greece's president, as he delivered his attack on German finance minister Wolfgang Schäuble (see 6.35pm)

He is surrounded by the Greek military leadership – which was reshuffled last autumn, sparking speculation that a coup was imminent. Instead, Lucas Papademos was installed as technocratic PM.

Bloomberg is reporting that Euro area finance ministers will issue a statement soon, following their telephone conference call.

The official statement from the eurogroup has just been released following tonight's call. The top line – there's no decision on Greece tonight. There's a new deadline (oh goody): next Monday.

Here's the key points from the statement, from eurogroup head Jean-Claude Juncker.

• The Troika has presented its final report on Greek debt stability

• Juncker is "confident" that the eurogroup will take the necessary decisions on Greece when it meets next Monday.

The eurogroup of finance ministers says that it has also identified where Greece needs to make further additional budget cuts totalling €325m, to meet the targets set by the IMF, ECB and European Commission (Reuters reports).

That €325m was identified by the Trioka last Friday, after Greece's party leaders refused to accept cuts to pensions.

Heads-up for UK readers. BBC Newsnight will be doing a piece on Greece tonight, discussing whether it will soon be ejected from the eurozone. From 10.30pm, BBC 2.

Paul Mason - just back from Athens - will be here tonight to explain why the eurozone might cut Greece loose. #newsnight BBC2, 10.30 — BBC Newsnight (@BBCNewsnight) February 15, 2012

Here's the full statement issued by Jean-Claude Juncker, president of the Eurogroup, following tonight's meeting:



As announced yesterday, I convened the Eurogroup to a conference call today in order to discuss the outstanding issues regarding the second adjustment programme for Greece. Substantial further progress has been made since yesterday. First, we received the strong assurances provided by the leaders of the two coalition parties in Greece's government. Second, the Troika finalized and presented its analysis on the sustainability of Greece's public debt. Third, further technical work between Greece and the Troika has led to the identification of the required additional consolidation measures of €325m and the establishment of a detailed list of prior actions together with a timeline for their implementation. Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of programme implementation and to ensure that priority is given to debt servicing. This

will strengthen debt sustainability further. On the basis of the elements that are currently on the table and the above-mentioned additional input, I am confident that the Eurogroup will be able to take all the necessary decisions on Monday 20 February.

Evangelos Venizelos, Greek finance minister, has announced that Greece's debt swap deal will be announced next Monday if the Eurogroup signs off on the second bailout package.

There's a few interesting rumours skitting around tonight following the eurogroup conference call.

Dow Jones is reporting tonight that some eurozone officials want a "Troika presense" agreed in Athens before the bailout can proceed, along with a commitment that Greece's rescue funds will be paid into an escrow account.

There's also a report that the German, Finnish and Netherland's finance ministers suggested that the eurogroup should also seek pledges from Greece's smaller political parties – having secured Antonis Samaras and George Papandreou's support.

That has not gone down well in Greece – journalist Efthimia Efthimiou argued that it showed that the eurozone was no longer prepared to help Greece.

If EZ really asks from communists or leftists for commitments, its clear they dont want to help #Greece — Efthimia Efthimiou (@EfiEfthimiou) February 15, 2012

Megan Greene, economist at Roubini Global Economics, though, reckons that the Troika is 'huffing and puffing', but will eventually provide Greece's funds.

The latest Greek developments helped to send shares falling in New York, where the Dow Jones Index just closed 97 points lower at 12780. A gloomy set of minutes from the Federal Reserve, warning that US GDP was more likely to come in below forecasts than beat them, also hit stocks.

Looks like the Anonymous group have managed to crash the website of the Greek parliament:

@YourAnonNews @AnonymousIRC Oooppsss.... did we hit up the Greece Gov again! YUP! TANGO DOWN!!! hellenicparliament.gr — AnonDDOS (@AnonDDoSNews) February 15, 2012

I"m getting an error message on the site now.

Anonymous launched a successful denial of service attack over the weekend, bringing down several Greek websites, in a show of support with the people marching on the streets.