This is your last chance to keep reform promises, Greece is told

Prime Minister Samaras pleads for breathing space but has little room for manoeuvre

The German Chancellor Angela Merkel yesterday gave a frosty reception to Greece's request for more time to meet the conditions of its sovereign bailout and the Eurogroup president, Jean-Claude Junker, warned the country was on its "last chance" to make good on its reform promises.

The Greek Prime Minister, Antonis Samaras, met Mr Junker in Athens yesterday as he kicked off his diplomatic campaign to secure more "breathing space" for his country to meet its commitments to cut spending, collect more taxes and reform its labour markets. "The ball is in the Greek court – in fact this is the last chance and Greek citizens have to know this," said Mr Junker at a press conference with Mr Samaras.

Mr Samaras, who has led Greece's coalition government since June, will travel to Berlin on Friday to meet Ms Merkel to make the same request for leeway. He hopes to persuade the country's European partners to give it an extra two years to implement its commitments on the grounds that the economy is shrinking more quickly than anyone expected.

"All we want is a bit of 'air to breathe' to get the economy running and to increase state income," he wrote in Germany's Bild newspaper yesterday. Mr Samaras also played down suggestions that Greece would be asking for an additional bailout on top of the €170bn pledged to it by the International Monetary Fund (IMF) and other European governments since May 2010 to avoid bankruptcy.

Yet Ms Merkel warned that no decision would be taken over Greece before September. "We await the report of the Troika," she said, referring to the inspectors from the European Commission, the European Central Bank and the IMF who must judge whether Greece is living up to its promises.

The Troika is due to decide next month whether the next instalment of the bailout package, worth €31.5bn, should be released. Mr Samaras said Greece could survive if the money was delayed by a month, but not much longer. "Theoretically we could bridge the time. But if we don't get the tranche at all Greece is broke," he told the Süddeutsche Zeitung newspaper.

Greece's economy is in its fifth successive year of recession and the unemployment rate has hit 23 per cent. The IMF has forecast that it will contract by 4.7 per cent in 2012. But Athens thinks the slump over the year will be closer to 7 per cent.

Mr Samaras has identified €11.5bn in spending cuts to be delivered between 2013 and 2015 to bring Greece's budget deficit below 3 per cent of GDP. But the Troika is also reported to be on the verge of ordering Athens to identify a further €2bn in cuts to meet its deficit reduction commitments, something which has prompted Mr Samaras to request more time.

Ms Merkel, meanwhile, is under growing domestic pressure not to approve more fiscal leeway. Some members of her own governing coalition have suggested that Greece should be ejected from the single currency, casting doubt over whether she could get assistance for Greece past her own parliament. But some analysts have suggested that Ms Merkel might be able to assist Greece without holding a new vote in the Bundestag. "Within the existing Greek programme envelope, the EFSF [the European bailout fund] could disburse aid instalments earlier to cover additional near-term financing gaps. Furthermore, interest rates on official aid could be cut, or payments postponed," said Christian Schulz of Berenberg Bank.

After meeting Ms Merkel on Friday, Mr Samaras will meet the French president, François Hollande, who is believed to be more sympathetic to Greece's request to be granted more time to meet its commitments.

Now Germany can borrow for nothing

Nervous investors parked their cash with Germany for nothing yesterday, with Berlin attracting reasonable demand at a sale of €4bn of new interest-free two-year bonds. The IOUs came with a zero coupon – meaning Germany pays no interest to the holder – for the second time this year, reflecting a fall in the country's borrowing costs to historic lows as the euro zone debt crisis threatened to engulf Spain and Italy.

While the prospect of the European Central Bank buying Spanish and Italian bonds to curb the two countries' borrowing costs has improved appetite for riskier assets, doubts over the size and timing of any intervention has ensured underlying demand for German debt. Reuters

Suggested Topics
News
Brand said he
people
Sport
Adam Lallana, Juan Cala, Andy Carroll and Cameron Jerome
sportThe latest news and scores
Voices
Actor Zac Efron
voicesTopless men? It's as bad as Page 3, says Howard Jacobson
Life & Style
Sampling wine in Turin
food + drink...and abstaining may be worse than drinking too much, says scientist
VIDEO
Arts & Entertainment
tvGrace Dent on TV
Arts & Entertainment
The monster rears its head as it roars into the sky
film
Voices
For the Love of God (2007) The diamond-encrusted skull that divided the art world failed to sell for
its $100m asking price. It was eventually bought by a consortium
which included the artist himself.
voicesYou can shove it, Mr Webb – I'll be having fun until the day I die, says Janet Street-Porter
Sport
Mercedes driver Lewis Hamilton of Britain drives in the rain during the qualifying session of the Chinese Formula One Grand Prix in Shanghai
sport
Extras
indybestFake it with 10 best self-tanners
Arts & Entertainment
Madonna in her music video for 'Like A Virgin'
music... and other misheard song lyrics
News
Much of the colleges’ land is off-limits to locals in Cambridge, with tight security
educationAnd has the Cambridge I knew turned its back on me?
Sport
Steven Gerrard had to be talked into adopting a deeper role by his manager, Brendan Rodgers
sportThe city’s fight for justice after Hillsborough is embodied in Steven Gerrard, who's poised to lead his club to a remarkable triumph
News
peopleOrlando Bloom the pin-up hero is making a fresh start
News
Who makes you happy?
happy listSend your nominations now for the Independent on Sunday Happy List
Life & Style
The North Korean TV advert for Taedonggang beer, that became a YouTube hit
food + drinkAnd what did it take to set up a taste test back in Wiltshire?
Arts & Entertainment
filmLife for Leslie Mann's can be challenging sometimes
Voices
For music lovers: John Cusack with his vinyl collection in 'High Fidelity'
voices...but don't forget rest of the year
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Apprentice IT Technician

£150.00 per week: QA Apprenticeships: This company is a company that specializ...

1st Line Technical Service Desk Analyst IT Apprentice

£153.75 per week: QA Apprenticeships: This company is an innovative outsourcin...

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Sales Associate Apprentice

£150.00 per week: QA Apprenticeships: We've been supplying best of breed peopl...

Day In a Page

How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players
Ben Stokes: 'Punching lockers isn't way forward'

Ben Stokes: 'Punching lockers isn't way forward'

The all-rounder has been hailed as future star after Ashes debut but incident in Caribbean added to doubts about discipline. Jon Culley meets a man looking to control his emotions
Mark Johnston: First £1 million jackpot spurs him on

Mark Johnston: First £1 million jackpot spurs him on

The most prize money ever at an All-Weather race day is up for grabs at Lingfield on Friday, and the record-breaking trainer tells Jon Freeman how times have changed
Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit