There is a growing fear in Paris that France is on the verge of a credit downgrade because of its exposure to Greek debt. President Nicolas Sarkozy has called on all European Union finance ministers to come together and compromise on a new deal - a view echoed by German Chancellor Angela Merkel. Added to this, global markets have been the subject of serious damage as the Greek debt crisis threatens to engulf both European and World markets.
On Wednesday the Dow Jones finished down 1.48 per cent whilst all major European indices were down by at least one per cent. The Asian markets were also damaged as investors sold shares amid fears of a growing economic crisis. The Japanese stock market has taken a 1.5 per cent dive exposing stocks to severe pressure. Investors sold shares amid fears over the impact of the growing Greek economic crisis with markets now seemingly smelling blood.
Tuesday's finance meeting in Brussels did nothing to allay fears of a further Greek crash. Finance ministers could not agree a deal, with Germany favouring a re-negotiation of the bail-out something the European Central Bank and France strongly disagree with. The Greek economy has to pass a 2012-2015 austerity programme worth £40.5bn by June end or Greece will face being cut from the rescue plan. Any cut to the rescue plan would cause widespread fear in the French markets.
The chances of a political settlement in Greece look unlikely after the general strike on Wednesday brought over 50,000 people to the streets. The Greek people will not accept the new austerity measures that Prime Minster George Papandreou is struggling to muster support for. Greek conservatives will vote against any further austerity measures which include five year tax hikes and spending cuts as well as the selling off of Greek property. Thursday continued to bring bad news for the Greek economy as unemployment figures reached 15.9 per cent.
France and the ECB believe any restructuring of the debt will lead to default and a need for compromise is essential. President Sarkozy commented 'without stability there would be no economic growth in the Eurozone.'
Sarkozy knows that Greece is only being kept afloat by the £159bn bail out from the European Union and the IMF. The rescue package will need support however no back up plan can be given without a political settlement in Greece. France fear that for as long as the Greek government delay their austerity measures and European finance ministers disagree over a deal, the growing fear is the French credit rating will be left exposed.