By Simon Miller

The European Union is planning for a Greek exit a European commissioner admitted today.

Speaking to Belgium paper De Standaard, European commissioner for trade Karel De Gucht said the European Central Bank and the EU were working on emergency scenarios for a Greek euro exit.

"A year and a half ago there may have been the danger of a domino effect. But today there are, both within the European Central Bank and the European Commission, services that are working on emergency scenarios in case Greece doesn't make it," he said.

His comments came as the German Finance Ministry admitted that it too was working on exit scenarios as it was "prudent to do so".

De Gucht added that although a Greek exit was uncosted, it was certain that there would be no contagion: "A Greek exit does not mean the end of the euro."

However, he warned that Greece was finished if it left the euro.

"C'est fini. It means that after a while you can no longer pay your officials who can no longer pay your pensions,” De Gucht added. "All you can do is have your central bank to print money, and then you get hyperinflation. That would cause a cataclysm in other countries that are now under pressure."

The warning comes as markets continued to slide for a fifth day. The FTSE 100 is down 39.92 at 5,298.46 while the CAC 40 is trading down 21 points at 3,011.78 (11.45 BST).

Home     More News

Financial Risks Today Beta Banner

Other stories you may find of interest:

Holding out for a debt restructure
Greece stands before a default abyss but, as Simon Miller discovers, before it rushes to restructure, there are litigating risks from international trade treaties to consider

Journey’s end for Solvency II?
Solvency II, the long-mooted new capital adequacy regime for Europe’s insurers, is nearing implementation. Graham Buck reviews its progress

Fencing off the risk?
The Independent Commission on banking has set the cat among the pigeons with the recommendation to ring-fence retail operations. Simon Miller looks at how this came about and what unintended consequences could arise

This website is a part of Perspective Publishing Limited, registered in England No 2876166.