Europe was on the brink of financial meltdown tonight as Greece’s political crisis threatened to bring down the single currency. Opposition parties in debt-stricken Athens have until Thursday to form a government or face the turmoil of a fresh election. The crucial next 48 hours will also see the first meeting between France’s new anti-austerity president Francois Hollande and Germany’s Angela Merkel tomorrow, which could see them clash over the future of the EU. As the panic caused billions of pounds to be wiped of the share value of Britain’s biggest companies today, European finance ministers held emergency talks in Brussels to prepare for a doomsday scenario. They fear a new Greek government will refuse to accept the austerity measures demanded by the European Union and the International Monetary Fund. The bankrupt country would then be denied its next tranche of the £103billion bailout and could be forced out of the euro. This could trigger a domino effect across the 17-strong eurozone with the contagion sparking a new banking crisis. Former EU commission chief Romano Prodi warned: “Exit would bring down the whole house of cards, with one state falling after another: it would reach Portugal, Spain, then Italy and France.” After nine days of deadlock, Greek President Karolos Papoulias was tonight trying to broker an agreement between political parties in Athens. But there was little cause for optimism with many believing the country will have to go to the polls again in June. Alexis Tsipras, leader of the left-wing Syriza party that finished second, has refused to join any coalition that accepts the terms of the international bailout. A party spokesman blasted: “They are looking for an accomplice to continue their catastrophic work. We will not help them.” One government minister tonight warned the country could descend into civil war if it was forced to go back to using the drachma. Michalis Chrysohoidis said: “What do we have to lose more than we have lost already? Our freedom. "What will prevail are armed gangs with Kalashnikovs and which one has the greatest number of Kalashnikovs will count – we will end up in civil war.” Mr Hollande – the first socialist French president in 17 years – was elected last week after promising to oppose the tough austerity measures imposed by Germany on the rest of the Eurozone. His hardline stance threatens to break the strong bond his predecessor Nicolas Sarkozy built up with Mrs Merkel. The German chancellor tonight warned Greece could be booted out of the Eurozone if it failed to stick to a deal to pay back hundreds of millions of pounds of bailout cash and continue with tough nationwide cuts. And Spain today pleaded to its leaders to reach a deal after its own borrowing costs rose and share prices fell at alarming rates. Athens is hoping it can renegotiate the bailout terms and ease the austerity. But some finance ministers made clear they were unwilling to reconsider. Luxembourg’s Luc Frieden said: “If Greece needs help from outside, the conditions have to be met. All political parties in Greece know that.” Panic on the London stock market today saw FTSE 100 shares plummet 110 points to 5465 – knocking £28billion off its value. Shares in the US, France, Germany, Spain and Italy also nosedived at the prospect of a another global financial crisis. Britain could also end up having to support a multi-billion pound rescue plan being drawn up by Germany to clean up the eurozone finances in the event of a Greek exit. The Prime Minister’s spokesman refused to rule anything out but said: “It is for eurozone countries to support their currency.” John Cridland, boss of the Confederation of British Industry, warned that a Greek exit would be like an “earthquake” for UK firms.
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