Fears grew around Europe yesterday that the Greek financial crisis could have dangerous spillover effects for the whole of the eurozone and the European Union at large.

As markets seized on the reaction of ratings agencies to the collapse in confidence in the face heavy Greek indebtedness, analysts and political leaders gathering for a summit in Brussels today were left wondering what, or who next?

"It is becoming clear that the eurozone's debt situation is only as stable as its weakest member," said economist Christoph Weil of Germany's Commerzbank, in a damning reading of the spiral of problems afflicting Athens.

"We now expect pressure on the euro," he said icily.

Greek Prime Minister George Papandreou warned yesterday that high levels of debt could "eliminate the country."

It was a statement aimed at a domestic audience for whom military rule - which ended in 1974 - remains fresh in the memory and which also provided an uncomfortable echo of Dubai's plight.

He pledged urgent action to restore confidence under pressure from stock and currency exchange markets as well as EU political leaders.

Greece's sovereign debt was downgraded on Tuesday by the international ratings agency Fitch, shining a gigantic bright light on a warning by European Central Bank chief Jean-Claude Trichet that Athens needed to take "courageous" decisions.

Mr Weil interpreted subsequent comments from outgoing EU commissioner for economic and monetary affairs, Joaquin Almunia, as "pointing to some sort of rescue plan. A difficult situation in one euro-area member state is a matter of common concern for the euro area as a whole," Mr Almunia stated plainly.

"If things got to something really unpleasant, there would probably in the end be some coordinated action by the other eurozone countries," suggested Gilles Moec of Deutsche Bank.

However, 24 hours from a summit of EU leaders in Brussels that was supposed to be dominated by negotiations in Copenhagen on climate change, Mr Moec noted that "coming to the rescue before it is absolutely necessary could be seen as counterproductive from the long-term point of view."

Greece recently revised upwards its deficit forecasts, which now stand at 12.7 per cent of its gross domestic product for 2009 and 9.4 per cent for 2010.

However, its debts are forecast to rise to 113 per cent of GDP by the end of December - and 120 per cent over 2010, figures that raise the spectre of a Latin American-style collapse if left unchecked.

Elsewhere in the eurozone, the EU has already helped Hungary, Latvia and Romania deal with the effects of the 2008 financial crisis.

But internal worries now extend to Ireland and Spain, which have each received warnings from the ratings agencies. Standard and Poor's has since cast doubts also over Portugal's prospects.

French Finance Minister Christine Lagarde has said that Greece, although plagued by street violence one year on from the police killing of a teenager that sparked serious social unrest, was not on the verge of financial collapse.

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