The Greek government has been urged to slash its public spending if it wants creditors to release a 31bn euro rescue package.

By Anthee Carassava, in Athens
3:14am UK, Thursday 23 August 2012

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The Greek government has a "last chance" to deliver spending cuts that could secure its future, a senior European politician has said.

The country's public spending must be slashed before its creditors will release a 31bn euro (£27.3bn) rescue package to keep it afloat.

But while Luxembourg's Prime Minister Jean Claude Juncker said a Greek exit from the euro would be a "disaster", he warned: "The ball is in the Greek court.

"In fact, this is the last chance and Greek citizens have to know it."

Mr Juncker chairs high-powered meetings of the eurozone finance ministers, which gives him significant influence.

He was speaking as Greece began a frantic round of diplomacy in an attempt to convince its European partners that it needs breathing space to achieve its bailout targets.

The German chancellor Angela Merkel - who is reportedly running out of patience with Greece - meets the French president Francois Hollande in Berlin late on Thursday to discuss the situation.

Greece has already failed to comply with the tough terms of two multi-billion euro bailouts that the eurozone and the International Monetary Fund (IMF) have financed since 2010.

But Athens is now proposing something different: two years of added leeway to meet its deficit targets without a fresh injection of funds from sovereign creditors.

Greek Prime Minister Antonis Samaras outlined the plan to Mr Juncker during their two-hour meeting on Wednesday.

He will pitch the proposal to Mrs Merkel on Friday, and Francois Hollande on Saturday.

Last weekend, German officials, including finance minister Wolfgang Schaeuble, said Athens was left with limited options.

"Greece cannot be helped - we can't make yet another new bailout programme. There are limits," he said.

The Dutch and the Finns, fearful of throwing good money after bad, also appear concerned.

Since the eurozone crisis erupted, multiple rounds of budget cuts have left the tiny country with undercurrents of anger and growing threats of social upheaval.

It is now in its fifth year of acute recession, and unemployment has surged to over 23% while the private sector is reluctant to invest.

"The only thing that Greece's government, its people and common sense is asking
for, is to return to growth," Mr Samaras said.

"Greece is asphyxiating."

http://news.sky.com/story/975937/last-chance-for-greece-to-cut-its-spending