Speculation is mounting that Greece will quit the Euro and return to the Drachma – prompting fears that other weak European countries such as Ireland could be forced to leave the Eurozone.
The failure to elect a government in Greece has only added weight to the theory that the crippled Greek economy will force the country to quit the Euro-zone.
European shares and the Euro have fallen in value in early trade on the markets on Tuesday as analysts react to the latest setback in Greece.
As Ireland prepares for the referendum on the European fiscal treaty, some pundits have predicted that the country will be forced to revert to the Punt in the wake of a No vote and the withdrawal of support from Europe.
However, Eurogroup head Jean-Claude Juncker has described the speculation about a Greek exit as ‘propaganda’ and ‘nonsense’.
“I don’t envisage, not even for one second, Greece leaving,” Juncker told reporters after a meeting of Eurozone finance ministers in Brussels.
“The 17 euro zone partners have unanimously affirmed their unshakeable desire to keep Athens in the Euro during our talks. This is nonsense, this is propaganda.”
However, Austrian finance minister Maria Fekter has claimed that Greece will have to leave the Euro zone AND the European Union itself.
The Euro fell to a four month low of $1.2845 on Tuesday with analysts predicting it could hit the 2012 low of $1.2623 in coming weeks and some forecasting a break toward $1.20.