German minister says Greek default possible

GERMANY'S economics minister has raised the possibility of an "orderly default" by Greece and branded the country's deficit-reduction efforts "insufficient".

Writing in the newspaper Die Welt, Philipp Roesler said: "To stabilise the euro, we must not take anything off the table in the short run. That includes as a worst-case scenario an orderly default for Greece if the necessary instruments for it are available." According to Roesler, such a default would mean "re-establishing the affected state's ability to function, perhaps with a temporary restriction of its sovereign rights".

The suggestion comes as Der Spiegel claim that preparations for a Greek bankruptcy have been ordered by German finance minister Wolfgang Schaeuble. According to the report, the possibility of Greece leaving the euro and returning to the drachma is being considered.

The revelations could trigger more instability in the fragile financial markets and come the day after Greece announced £1.7bn of budget cuts and a new country-wide real estate tax.

Read a full report at the Telegraph. ·