Thursday saw protests on the streets of Athens. Police clashed with demonstrators, unhappy with the details of austerity plans announced by the government.
The 4.8 billion euro package will come in the form of wage cuts, a freeze on pensions and tax increases. The tough measures are needed to keep Greece in the eurozone, by cutting its budget deficit – especially if no bailout is forthcoming.
Hans-Werner Sinn, the President of IFO, said: “We can help by permanently giving Greece gifts every year in this order of magnitude or ask the country to devalue. A devaluation can be done within the euro zone by cutting wages and prices, but this is the recipe for disorder and revolution.”
On Friday the Greek Prime Minister, George Papandreou, will be looking for support in this crisis. In Luxembourg, he will meet with Eurogroup chief Jean-Claude Juncker.
Then he will go to Berlin to see German Chancellor, Angela Merkel. However, she has been hesitant about a rescue plan, saying Greece must solve its own problems.