Germany warns over debt commitments

Germany has warned the new Greek government that it must live up to its commitments to its creditors.

German government spokesman Steffan Seibert said it was important for Greece to “take measures so that the economic recovery continues”.

His comments were echoed by the head of the eurozone finance ministers’ group.

Syriza party, which won Sunday’s poll, wants to scrap austerity measures demanded by international lenders, and renegotiate debt payments.

However Jeroen Dijsselbloem, president of the Eurogroup, said on Monday: “There is very little support for a write-off in Europe.”

Speaking after a meeting of eurozone finance ministers in Brussels, he said members should “abide by the rules and commitments”.

Meanwhile the German government said that Greece’s new leadership should take measures to ensure the economic recovery continues.

“A part of that is Greece holding to its prior commitments and that the new government be tied in to the reform’s achievements,” government spokesman Steffan Seibert said


Robert Peston, BBC economics editor adds:

If Syriza were to win its negotiations with the rest of the eurozone, other anti-austerity parties would look more credible to voters. The victory of protectionist Marine le Pen in France’s presidential election would be an interesting test of markets’ sangfroid.

And if Syriza were to lose in talks with Brussels and Berlin, and the final rupture of Greece from the euro were to take place, investors might well pull their savings from any eurozone country where nationalists are in the ascendant.

So why are investors not in a state of frenzied panic? Why have the euro and stock markets bounced a bit? One slightly implausible explanation is that investors believe the eurozone would actually be stronger without Greece, so long as no other big country followed it out the door.

More likely is that they believe reason will prevail, and Berlin will sanction a write-off of Greece’s excessive debts.