The European Union has agreed to help Greece meet its next round of interest payments, on the condition they agree to a punitive set of economic measures designed to reduce their deficit.
If the Greek government manages to pass additional spending cuts of £25bn over the next five years, they will be eligible to receive the next 12bn euro instalment from the current 110bn euro bail-out package.
If they are not able to secure this funding from fellow eurozone countries and the International Monetary Fund, they will default on their next loan payments which are due in July.
The series of measures required to qualify for this financial support are deeply unpopular amongst the people of Greece.
After surviving a vote of confidence this week, it looks reasonably likely that the Greek government will be able to push the necessarily measures through parliament next week.
The Euro sovereign debt crisis, with its current focus on Greece, has had a big impact on global financial markets.
In the UK, the FTSE 100 index of leading UK company shares closed down 98.61 points (or 1.71%) at 5674.38 yesterday.
Amongst the biggest losers yesterday were Vendanta Resources (down 6.86%), Royal Bank of Scotland Group (down 4.94%) and Glencore International (down 4.77%).
Markets like certainty, and the current levels of uncertainty surrounding the future of the euro have caused investors to favour safer havens.
There is some good news for the UK taxpayer however. David Cameron has secured exemption from the second round of financing for the Greek bailout from non-euro countries.
Whilst the UK will still contribute via the International Monetary Fund, our exposure to the bail out will be lower by virtue of this exemption.
Photo credit: Flickr/liako
