Greek Debt Solution 'Won't Happen Overnight' - Sky News

6:38pm UK, Tuesday July 19, 2011

EU leaders will not be able to come up with an overnight solution for the Greek debt crisis when they meet this week in Brussels, the German Chancellor has warned.

Mrs Merkel will meet other EU leaders in Brussels at a summit later this week

Angela Merkel said it was not politically responsible to draw up a hasty plan - and instead said leaders must examine the causes of Greece's debt and the issue of raising its competitiveness.

"Further steps will be necessary and not just one spectacular event which solves everything," she said in a news conference.

"Europe is unthinkable without the euro and therefore it is worth making every responsible effort to really solve the problems at the very root."

The EU leaders' summit takes place on Thursday, and topping the agenda will be discussion of another bailout package for Greece, which received emergency loans of nearly £100bn last year.

Greece's finance minister Evangelos Venizelos said he was confident European governments and private bond holders would be able to draw up a new rescue deal by the conclusion of the summit.

"At issue is the euro and the resilience of the eurozone," he said.

"That is why protection of Greece is a self defence mechanism for the eurozone. That will help us avoid a domino effect."

Analysts say a forced restructuring of Greek debt could rattle financial markets and lead to contagion in the region.

It could possibly force defaults in Portugal and Ireland, who have also received an emergency loan package by the EU, the ECB and the International Monetary Fund.

Borrowing rates in larger eurozone members, such as Italy and Spain, have risen alarmingly in recent days.