Merkel: Financial Crisis Could be Europe’s Toughest Time Since War

Posted November 15th, 2011 at 3:05 am (UTC-5)
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German Chancellor Angela Merkel says the eurozone's financial problems may be Europe's biggest crisis since World War Two.

Ms. Merkel said Monday that a united Europe could fail if the 17-nation eurozone breaks up over debt problems in Greece, Italy and elsewhere. Germany is Europe's strongest economy, and the chancellor's comments came as new leaders in Italy and Greece try to cope with massive debt and slow growth that could hurt the eurozone economy.

Greek civil servants are scheduled Tuesday to hold a three-hour strike against the new government. Meanwhile, members of the International Monetary Fund , European Central bank and the European Union are set to begin talks with government officials ahead of a decision on giving Greece its next loan installment.

The Greek Parliament will hold a confidence vote Wednesday on Prime Minister Lucas Papademos' new government and proposed policy changes.

Italian Prime Minister designate Mario Monti said Monday that Italians can expect to make sacrifices. He said he needs time to implement the spending cuts and economic reforms that parliament approved last week. Monti said he and his still-to-be-named Cabinet intend to stay in office until the 2013 elections. He said putting an earlier time limit on his new government would ruin its credibility.

Italy was able to borrow more than $4 billion in a new bond sale Monday. The interest rate was the highest since 1997. But analysts say the good response to the sale and gains in Asian stock markets show growing investor confidence in Italy.

EU leaders have been pressuring Italy to cut public spending to avoid becoming the latest eurozone member to request a bailout. EU officials worry that the Italian economy is too big to be rescued.