This will result in a steep rise in taxes to cut deficits as well as major cuts in Civil Service wages and state benefits. Protesters resentful of the austerity measures were seen clashing with police in Athens. The Greek Prime Minister, George Papandreou, warned that Greece faced a battle for survival. "We will do whatever it takes to save the country," he said.

While officials from the IMF and ECB hope to stave off the consequences of Greece's debt, fear of contagion gripped Europe's financial markets as Spain's credit rating was downgraded less than 24 hours after Greece was sent into financial meltdown. In Britain, the opposition termed Greece "a warning" against accumulating debt. The government, however, stressed that the two economies are in "fundamentally different" situations.