Greek prime minister warns of March default

Greek Prime Minister Lucas Papademos has said Greece may default on its debts in March unless unions accept further cuts to salaries.

Mr Papademos said more cuts were needed to avoid exiting the eurozone.

Analysts say the warning is to prepare Greece for more austerity measures.

European Commission, International Monetary Fund and European Central Bank inspectors, known as the troika, arrive to assess Greece's progress in cutting its deficit on 15 January.

They will decide whether to provide further bailout funds to the country.

"Without an agreement with the troika and further funding, Greece in March faces an immediate risk of an uncontrolled default," Mr Papademos said.

However, analysts said the risks of not providing the funding were too great.

"Without a firewall in place to stem contagion from a Greek default to other European banks, it is very unlikely the troika will decide to deny Greece the funds and cut the country loose," Megan Greene at Roubini Global Economics told the BBC.

"However, even if the troika does transfer the next tranche of funds to Greece, the country risks a hard default, unless a deal is agreed on private sector involvement before March."

BBC