01/11/2011 Newsnight


01/11/2011

Presented by Gavin Esler. As the announcement of a Greek referendum on a European Union aid package throws the deal into doubt, Newsnight asks what is next for the eurozone.


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Tonight's recipe, take a debt crisis add a half-baked summit deal,

:00:11.:00:16.

and a referendum, and there is trouble on the streets. Mix in an

:00:16.:00:19.

emergency cabinet meeting, that is what is cooking in Greece tonight.

:00:19.:00:23.

The result, stock markets tumble, a Government on the edge.

:00:23.:00:26.

In Cannes, at the G20, the most powerful people in the world have

:00:26.:00:30.

been rendered powerless by a Greek political fiasco.

:00:31.:00:36.

Is last week's deal on the euro unravelling. The man who negotiated

:00:36.:00:40.

the bank's 50% haircut joins us live.

:00:40.:00:44.

Plus, The Italian Jb, who can steer one of Europe's big economies

:00:44.:00:47.

through austerity. Those Italians who want the best,

:00:47.:00:51.

who is going to lead them? If you see that politician, please tell

:00:51.:00:59.

In Britain, the economy is growing, but 75 years after the Jarrow March,

:00:59.:01:04.

is there a new north-south divide. We will ask a Conservative Treasury

:01:04.:01:08.

minister. And the controversial law joint enterprise, which means you

:01:08.:01:11.

can be convicted of a serious crime, even if you are not directly

:01:11.:01:15.

involved. I didn't stab anyone, you didn't

:01:15.:01:20.

know the knife was present, but the person died, and under joint

:01:21.:01:24.

enterprise you have all been convicted. You come out with murder

:01:24.:01:30.

under your name. Good evening, perhaps it tells you

:01:30.:01:33.

a lot about the politics of the European Union, that the threat of

:01:33.:01:37.

voters actually having a direct say in a referendum brought markets

:01:37.:01:41.

tumbling all around the world today. Tonight the Greek cabinet are in

:01:41.:01:44.

urgent talks as we speak, the Prime Minister's career on the brink,

:01:44.:01:48.

with a vote of confidence scheduled this Friday. Before that he will

:01:48.:01:50.

attend another emergency meeting tomorrow with other EU leaders.

:01:50.:01:55.

This time in Cannes. Ahead of the G20 Summit. Well, the decision by

:01:55.:01:58.

the Greek Prime Minister to ask the Greek people, in effect, to back

:01:58.:02:03.

him or sack him, was a real surprise. The fears now are that

:02:03.:02:06.

last week's eurozone deal could unravel just a few days after it

:02:06.:02:12.

was struck. Paul Mason is in Cannes for us tonight.

:02:12.:02:16.

As far as we know the Greek cabinet is still in session. We hear that

:02:16.:02:19.

the ministers are going round the table saying what they think, so

:02:19.:02:23.

far, we hear, you can hear things out of a Greek cabinet, that they

:02:23.:02:29.

are backing him. But Mr Papandreou really has caused chaos in the last

:02:29.:02:33.

24 hours. This referendum call puts the whole deal agreed in Brussels

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last week back on the table, back into doubt. Certainly the markets

:02:38.:02:43.

have seen it as possibly signalling the end game, where Greece enters

:02:43.:02:47.

into chaotic default process, as the people have their say, whether

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it is in a referendum or snap election if the Government falls.

:02:50.:02:54.

Once they have had their say, Greece, inevitably slides towards

:02:55.:02:59.

leaving the euro, eventhough most of them don't yet want to do that.

:02:59.:03:03.

The banks in Europe have been hit hard because of this. Most stock

:03:03.:03:13.
:03:13.:03:14.

markets as you say fell, but Unii Credit and Sot-Gen, double digit

:03:14.:03:20.

loss, meanwhile the Dutch have weighed in. The Dutch, the key part

:03:20.:03:27.

of governance arrangements in that country, saying they think the

:03:28.:03:31.

referendum Wells muchs on the deal, and that they are not tied to what

:03:31.:03:35.

they agreed, they might not be the last north European Government to

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say that. In Greece there is chaos, the Finance Minister, we hear, knew

:03:40.:03:44.

nothing about the referendum call before it was announced. He checked

:03:44.:03:48.

into hospital with stomach patience. They chose the very same day, we -

:03:48.:03:52.

pains. They chose the very same day, we hope, to sack some general, and

:03:52.:03:57.

Mr Papandreou has been off the airways all day. In the notes

:03:57.:04:00.

coming out of the banking fraternity, there is a clear

:04:00.:04:05.

worrying there will be a chaotic default and exit from the euro.

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That, I think would be end game, that is why people are so wore

:04:09.:04:13.

yeefpltd this report contains tpwhrarb photography.

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When the Greek frame - flash photography. When the Greek Prime

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Minister announced a referendum and confidence vote on the deal agreed

:04:21.:04:25.

last week, the word "bombshell", failed to do it justice. The

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markets fell, the Finance Minister went into hospital, a flurry of

:04:28.:04:33.

phone calls happened between world leaders, and one after the other,

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Mr Papandreou's MPs went A wol. Then, an - AWOL. Then an emergecy

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cabinet meeting. This is how Greeks greeted the deal their Government

:04:45.:04:52.

did last week, the word they chant "no", and last Friday saw clashes

:04:52.:04:58.

between people and military conskrupts over the disruption of

:04:58.:05:03.

cermonial parades. But Greece will get 100 euros of its debt written

:05:03.:05:06.

off, but faces more austerity, and virtually foreign control of its

:05:07.:05:11.

ministries. For many Greeks, Mr Papandreou's referendum will be a

:05:11.:05:15.

straight choice, vote no and effectively default and leave the

:05:15.:05:20.

euro. The Greek crisis is feeding and

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feeding off the simmering Italian crisis. Italy's bond yield, its

:05:26.:05:30.

cost of borrowing, has shot up above 6% into unsustainable range,

:05:30.:05:34.

but it is too figure to fail, and needs the best part of a trillion

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euros from the EFSF bailout fund, that doesn't yet exist, so the

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European Central Bank had to dive in and spend 9 billion euros to

:05:43.:05:50.

calm things down for a day. For the protestors gathered in Nice

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today, there was a sense that amid their ordinary demands and protests,

:05:54.:05:57.

something extra ordinary is about to unfold, because the Greek

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referendum, or a snap election, will see the Greek people suddenly

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dial into a situation they have, up to now, had no say in.

:06:05.:06:08.

A point not lost on Britain's Chancellor.

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There is no doubt that the decision of the Greek Prime Minister has

:06:12.:06:16.

added to the instability and the uncertainty in the eurozone, you

:06:16.:06:20.

can see that today, and what we're trying to do is create stability

:06:20.:06:24.

and certainty in the eurozone. Now, ultimately, it is up to the Greek

:06:24.:06:27.

people and the Greek political system to decide how they make

:06:27.:06:31.

their decisions. But I would say it is extremely important for the

:06:31.:06:34.

eurozone to implement the package they agreed last week, that is what

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I said was crucial at the time, that is what they all said was

:06:37.:06:40.

crucial at the time. I think we need to get on with it sooner

:06:40.:06:48.

rather than later. Tomorrow, here at the G20, they

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will there - there will now have to be an emergency meeting, and

:06:52.:06:56.

discussion about how the Greek people suddenly got dialed in, to a

:06:56.:07:00.

decision that most people had thought decided at the last

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emergency meeting, and what will happen if they are not quickly

:07:02.:07:09.

dialed out again. The laidback Riviera, even more unreal than

:07:09.:07:12.

normal under the fairy lights, gets ready for another surreal day,

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tomorrow. Tonight, what are the options left

:07:17.:07:26.

for Greece and the eurozone? If you going go back to last week. The

:07:26.:07:30.

deal agreed is they would get a third of their debt knocked off,

:07:30.:07:35.

and the people penalised by that would be the banks. Two thirds, or

:07:35.:07:39.

half of their debt is held by people like the IMF and ECB, they

:07:39.:07:43.

wouldn't lose a thing. But in return, Governments would shore up

:07:43.:07:47.

the banks, so it was a very convenient deal. It was a sort of

:07:47.:07:52.

buffer zone for the impact of the default, which is effectively what

:07:52.:07:57.

it is. Now, if the Greeks vote no, then what will then happen is there

:07:57.:08:02.

will be a much bigger default, up to 90-100%, that will apply to

:08:02.:08:05.

everybody else who holds the debt. Because it will not be voluntary,

:08:05.:08:09.

as it currently, this is the fiction, that it is voluntary for

:08:09.:08:14.

the banks, then if it is not voluntary, these credit default

:08:14.:08:19.

swaps, these insurance, basically policies, against default, get

:08:19.:08:23.

triggered and it fires the whole explosive charge into the heart of

:08:23.:08:27.

the financial system. So those are the options if they don't stick to

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what they are supposed to do. You know what I think has caused this.

:08:33.:08:37.

The Greeks have had foreign civil servants turn up in their

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ministries, and most Greek politicians have spent the last 18

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months shuttered in private offices with no name plate, terrified of

:08:45.:08:49.

going out on to the street, they have been shut off from reality,

:08:49.:08:53.

that hit them this week when those foreign civil servants turned up in

:08:53.:08:56.

the ministries and said we are now in control. It is very hard for

:08:56.:08:59.

democratic politicians to accept that. That is what has triggered

:08:59.:09:03.

this phase of the crisis. Thank you very much, we will come

:09:03.:09:06.

back shortly to you. In a moment we will also speak to

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Vicky Pryce, an economist from FTI Consulting and former head of the

:09:11.:09:15.

Government's economic service, and a Greek member of parliament. First

:09:15.:09:20.

we're joined by Charles Dallara, as head of the Institute for

:09:20.:09:22.

International Finance, was in charge for negotiating for the

:09:22.:09:26.

banks the terms of the Greek bailout deal, including the 50%

:09:26.:09:31.

haircut for private investors in Greek Government debt. Does this

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prospect of a Greek referendum mean that as far as you are concerned

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the deal you negotiated in good faith could be dead? No, not to us

:09:40.:09:44.

at all. We remain focused, despite the political uncertainties

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swirling around Greece and Europe. We remain focused on developing and

:09:48.:09:54.

agreeing the details of the agreement. And bringing forward the

:09:54.:09:56.

implementation as soon as practicable. And delivering to

:09:56.:10:01.

Greece and the Greek people the benefits of this deal. But, presume

:10:01.:10:04.

below you had no idea this was going to happen, it must have come

:10:04.:10:10.

as quite a shock? It certainly was a surprise. But we live in

:10:10.:10:13.

uncertain times, and every day in dealing with the Greek deal it is a

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bit like getting on the Coney Island rollercoaster, you take some

:10:18.:10:21.

sharp turns, they are unexpected and it rattles you a bit, then you

:10:21.:10:25.

settle down and move forward. That is what we tried to do in the

:10:25.:10:30.

course of the last 36 hours or so. We remain focused on the deal. We

:10:30.:10:33.

are engaged with technical discussions with partners in Greece

:10:33.:10:38.

and Europe on how the deal may be fleshed out. We look forward to

:10:38.:10:41.

doing that. This is an historic opportunity for Greece to put aside

:10:41.:10:46.

a substantial burden of debt, which has hung over them throughout this

:10:46.:10:51.

last two years of adjustment. And with that cloud of debt

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substantially removed, we think that the burden on Greece will be

:10:54.:10:58.

lightened, the hardships associated with reform will be reduced, the

:10:58.:11:05.

path of reform will be shortened and the opportunities to reap the

:11:05.:11:08.

benefits of this entire difficult process will be greater than in the

:11:08.:11:12.

past. That is why I remain focused, as do my investor base, in moving

:11:13.:11:17.

forward with this deal. That may all be true but the politics of it

:11:17.:11:20.

are that the Greek people are being asked to vote on something that

:11:20.:11:24.

could mean years of shrinking living standards. That produces

:11:24.:11:28.

real uncertainty for the people you represent. We don't even know if

:11:28.:11:32.

the referendum will be held in January. You could have month of

:11:32.:11:37.

uncertainty, which presumably nobody you represent wants? You are

:11:37.:11:42.

right, but it is very important for the Greek people to understand and

:11:42.:11:45.

to realise what are the real choices before them. Of course we

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totally respect the leadership of the Greek Government in its

:11:48.:11:54.

decision to move forward with a referendum. However, as we see it,

:11:54.:12:03.

quite frankly, this historic relief of debt, which will create a huge

:12:03.:12:06.

lessening in the burden, eliminating debt that is currently

:12:06.:12:14.

equal to 45% of Greece's GDP. And restructuring 45% of the remaining

:12:14.:12:18.

debt. Will create a tremendous opportunity for Greece, it seems to

:12:18.:12:22.

me the choices are quite clear. On the one hand they follow through

:12:22.:12:25.

with the agreement, they seize the opportunity to reap the benefits of

:12:25.:12:29.

their hard work, and they move out of austerity, into growth and

:12:29.:12:35.

investment and job creation, within a matter of a few years the

:12:35.:12:38.

alternative path to me is one not seriously contemplated, because it

:12:38.:12:42.

is a path of isolation, and a path, I'm afraid, a contracting economy,

:12:42.:12:48.

for a long, long time. It may not be visible, but it is

:12:48.:12:52.

possible. It may be that investors round the world looking at Greece

:12:52.:12:56.

and Italy might conclude that the bond market itself could be wrecked

:12:57.:12:59.

because debts of these big countries could be virtually

:12:59.:13:06.

unsurable in the future? I think - Uninsurable in the future? I think

:13:06.:13:10.

what is happening in Greece is very serious and we should take it very

:13:10.:13:12.

seriously. However I think the situation in Spain and other

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countries is very different. The plan outlined in Brussels last week

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to create firewalls and underpin the sovereign efforts in other

:13:21.:13:26.

countries, such as Italy, is a good plan. It also needs to be fleshed

:13:26.:13:30.

out. I think European leadership is in the process. Although it might

:13:30.:13:34.

not seem that way right now, beginning to get ahead of the

:13:34.:13:37.

sovereign debt problem. I think if the real choices are outlined for

:13:37.:13:42.

the grok people, the choice between a painful - Greek people, the

:13:42.:13:48.

choice between a painful but some what shortened period of austerity,

:13:48.:13:51.

bringing new opportunities for investment and job growth, is

:13:51.:13:56.

outlined in contrast to a choice of a much longer period of austerity,

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and isolation in the markets, that the Greek people will make the

:13:59.:14:05.

right choice. We bring in a local MP in Greece.

:14:05.:14:09.

Do you think that Greek people will agree with that analysis in the end,

:14:09.:14:16.

and say this is the least worst option, it is good for us? I think

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that the Greek people are full of anger. We are hearing words, words,

:14:26.:14:32.

words. I believe I heard from Mr Dallara and the Greek economy is

:14:32.:14:40.

frozen, the people are without jobs. The best of our young people are

:14:40.:14:46.

leaving for Canada and Australia. We are a modern colony in Europe.

:14:46.:14:51.

It was no national independence, and our Prime Minister is not Mr

:14:51.:15:01.
:15:01.:15:02.

Papandreou, our real Prime Minister is Mrs M - Mrs Merkel, she decides

:15:02.:15:08.

what road Greece will follow. Something must change. I think that

:15:08.:15:12.

for the first time after all these big demonstrations of the people,

:15:12.:15:22.

there is hope, hope that we are near the beginning of the end of

:15:22.:15:26.

this very bad era for Greece. you think Mr Alavanos that this is

:15:26.:15:29.

the end for the Papandreou Government, will he survive the

:15:29.:15:38.

week, do you think? Yes, I think yes. I think yes because you know

:15:38.:15:45.

his party is totally reconstructed. There are objections inside the

:15:45.:15:51.

cabinet this time. Until ten minutes before the cabinet had a

:15:51.:16:00.

meeting, a member left his party today, the people are totally angry

:16:00.:16:05.

with this party. I think it is a problem of timing. After two hours,

:16:05.:16:09.

after four hours, after one day, after three days, I think Mr

:16:09.:16:19.
:16:19.:16:22.

Papandreou will show that Mr Sarkozy and Mrs Merkel that it's

:16:22.:16:27.

finished. Is this the beginning or end of the eurozone? If we end up

:16:27.:16:32.

with the Greeks voting no we will see the beginning of the end of the

:16:32.:16:36.

Euro-project. It will spread to the other countries as well. We may not

:16:36.:16:41.

get to the point. The question of it may be phrased in such way that

:16:41.:16:45.

in fact the decision may be between asking the Greeks if you want to

:16:45.:16:49.

leave the euro, and maybe the EU, with the implications that will

:16:49.:16:55.

have, or do you want something with a hope for future but costs. We are

:16:55.:17:00.

working hard to ensure that leads you to faster growth in the

:17:00.:17:04.

foreseeable future. Do you think Mrs Merkel, perhaps the Prime

:17:04.:17:09.

Minister of Greece, from what we have been hearing, do you think she

:17:09.:17:13.

has miscalculated and Mr Sarkozy has miscalculated, they have got

:17:13.:17:16.

this wrong? What they have got wrong is waiting so long to get a

:17:16.:17:21.

solution. If we had some answers to the Greek problems six month or a

:17:21.:17:28.

year ago things would have been different. The contagion wouldn't

:17:28.:17:31.

have spread to other countries. That was a mistake, they realised

:17:31.:17:36.

they then had to act and they did. It was absolutely right in terms of

:17:36.:17:40.

the package coming forward. We may see in the future that the 50%

:17:41.:17:44.

haircut is not enough, and there may be more need. I was hoping

:17:44.:17:50.

there would be a little bit of time after the last tranche of the eight

:17:50.:17:54.

billion was paid, to think again about exactly what Greece needed to

:17:54.:17:59.

do to get out of its problems, which are basically low growth, and

:17:59.:18:03.

contracting GDP for a number years, which the population doesn't like.

:18:03.:18:09.

A word from our other two guests, Alekos Alavanos, do you worry there

:18:09.:18:17.

will be a military coup in Greece? I hope not. Of course the situation

:18:17.:18:22.

in Greece is very troubled, but there is a hopeful element for

:18:22.:18:29.

Greece, and for Europe. That the people are people, that they are a

:18:29.:18:33.

political subject who have the demonstrations of a million people

:18:33.:18:43.
:18:43.:18:44.

for some days. So I think we have a road to democracy not a fear for a

:18:44.:18:48.

coup d'etat. Do you think having accepted the 50% haircut, what

:18:48.:18:51.

remains of the money of the people you represent is safe. In other

:18:51.:18:56.

words it all sounds pretty gloomy? Well, I think we have confidence

:18:56.:19:00.

thra this deal is the right deal, - that this deal is the right deal,

:19:00.:19:05.

it is balanced deal. It is an historically substantial deal in

:19:05.:19:08.

terms of sovereign debt restructuring. It is very important,

:19:08.:19:14.

if I may add, we can all sense the despair and fatigue around Greece

:19:14.:19:20.

today. I lived there two years as a young novel officer, I have many

:19:20.:19:26.

friends in Greece - Navy officer, I have many frepbz in Greece. What is

:19:26.:19:30.

important to articulate is what happened in Greece last week was

:19:30.:19:36.

designed to alleviate a large part of the burden on the people. The

:19:36.:19:39.

pace of austerity and reform over the last 18 months was too

:19:40.:19:44.

aggressive, too demanding and too challenging for many people. We

:19:44.:19:48.

need a more moderated path of adjustment delivering benefits for

:19:48.:19:52.

Greece. Let's return to Paul in Cannes, I

:19:53.:19:57.

think you have some news for us from the Greek cabinet meeting?

:19:57.:20:02.

we are getting out of Athens, the line that the Greek cabinet has

:20:02.:20:10.

been told by the Prime Minister that this market turmoil will be

:20:10.:20:14.

short lived. He has also said, he has stuck to his guns on the

:20:14.:20:19.

referendum, he said if we have a snap election that would lead to

:20:19.:20:26.

dae fault. On that cheery note - a default. On that cheery note we

:20:26.:20:31.

turn to Italy. My colleague has been in Italy for the past few days

:20:31.:20:35.

assessing the mood there. As he has found in Milan, there is Euro-

:20:35.:20:42.

sceptic even there, and quite a lot of people very resist sent to

:20:42.:20:49.

accepting the de- resistent to the degree of austerity they want to

:20:49.:20:56.

impose. His name is Ambrose, he is 672 years old. But Milan's patron

:20:56.:21:02.

saint, isn't allowed to rest in peace. The cult of the Roman

:21:02.:21:08.

governor turned bishop, is being offered up as a sacrifice to help

:21:08.:21:13.

preserve the security and stability of the eurozone. The people here

:21:13.:21:17.

have always celebrated St Ambrose. But now under pressure from the

:21:17.:21:22.

European Central Bank to impose austerity, the Italian Government

:21:22.:21:26.

has proposed turning local saints' festivals into ordinary working

:21:26.:21:28.

days. That is causing quite a row here.

:21:28.:21:34.

The need for urgent reform in Italy is pretty clear. Its economy is

:21:34.:21:42.

expected to contract next year by 0.2%. Its public debt is 1.trillion

:21:42.:21:46.

euros. Its borrowing costs rose today to 6.3%. Widely regarded as

:21:46.:21:54.

unsustain pbl. Durb unsustainable. The church

:21:54.:22:02.

can't see how that effects Ambrose. TRANSLATION: The Italians are hard-

:22:02.:22:05.

working people, I don't think abolishing this will solve the

:22:06.:22:09.

country's economic problems. Yes, you have to work, but you have to

:22:09.:22:14.

celebrate too. The battle over St Ambrose's day and hundreds of other

:22:15.:22:18.

local holidays across Italy, is part of the soul searching provoked

:22:18.:22:22.

by the country's economic crisis. A country that at times over the

:22:22.:22:28.

century has led Europe, not only in faith and art but also in banking,

:22:28.:22:35.

in summers and in manufacturing skills s suddenly being told by

:22:35.:22:39.

northern neighbour, to put its house in order. Being compared to

:22:39.:22:44.

Greece, a much smaller state with a smaller culture. How much that

:22:44.:22:49.

rankles, and it does, many Italians of various political complexions

:22:49.:22:54.

acknowledge that their country has some how lost its way.

:22:54.:22:58.

Jr Nobody is sure who can set - and nobody is sure who can set it whack

:22:58.:23:04.

on the right track. Here in Milan I'm meeting one of the few figures

:23:04.:23:08.

that everyone respects. He's a businessman, not a politician. In

:23:08.:23:14.

charge of a Milanise icon, more famous even than Ambrose, Pirelli

:23:14.:23:19.

tyres. A man with no time to be sentimental of the sairpbts.

:23:19.:23:24.

think it is important that factories they have to stay open, 3

:23:24.:23:30.

- saipbts. I think it is important that the factories stay open 365

:23:30.:23:35.

days a week. It is a place of precision, hundreds of laser

:23:35.:23:39.

cuttings, for each pattern for everyone that is eventually

:23:40.:23:44.

marketing. Testing each proto-type with an exacting standard that

:23:44.:23:51.

shows Germans have little to teach Italians. That is how we show being

:23:51.:23:56.

Italian and our own creativeness. The main problem most of the

:23:56.:24:02.

production is moving abroad, only 550 people left are based in

:24:02.:24:07.

ittally. 1234 - Italy. That is not how it

:24:07.:24:12.

was in the post-war boom, when Pirelli motored ahead along with

:24:12.:24:16.

the rest of the economy. The economic declined since. It is due

:24:16.:24:24.

part low to global trends, but also a lack of leadership. In the 1950s,

:24:24.:24:28.

the ruling class were white people that suffered because of the war

:24:28.:24:33.

and the dictatorship. They were well aware of the risks and the

:24:33.:24:39.

opportunities they were facing. And the profit of it. What is the

:24:39.:24:45.

ruling class today, what is wrong with them? It is much more

:24:45.:24:50.

complicated today, there are too many people at any level. The

:24:50.:24:53.

institutional system is creating complexity instead of solving

:24:53.:25:01.

problems. The number of laws we have in our country, far than in

:25:01.:25:06.

any other European country. Italy's Labour laws are not complex or

:25:06.:25:13.

rigid enough to prevent 325 workers at this electronics plant in Milan

:25:13.:25:18.

from losing their jobs next month, as production goes oversea. Inside

:25:18.:25:26.

the protest tent they are contemplating a way of life - - the

:25:26.:25:31.

tent they are contemplating a way of life. Tran When - TRANSLATION:

:25:31.:25:36.

You came here knowing it was a job for life. Lots of older people only

:25:36.:25:42.

came to collect their pension. It was like working for the state.

:25:42.:25:46.

With anti-pasta served on the picket line, you might think life

:25:46.:25:56.
:25:56.:25:58.

is too comfortable for protestors. There is the 17-year-old son of one

:25:58.:26:01.

of the workers, he fears there is no money for him to go to

:26:01.:26:09.

university if his mother loses her job.

:26:09.:26:12.

Berlusconi - TRANSLATION: Berlusconi don't make anything easy

:26:12.:26:18.

for anybody. If there are 35-year- olds and 45-year-olds not finding

:26:18.:26:25.

work in Italy, how are young people going to find themselves a job.

:26:25.:26:28.

real reason the factory is closing, the union says, is there is no

:26:28.:26:38.

market in Italy for the temly comcomponents it makes. - telecom

:26:38.:26:44.

components it makes. Italy had this many broadband lines, France with a

:26:44.:26:48.

population only slightly larger had more than 20 million. For many

:26:48.:26:52.

Italians that is part of a wider failure of leadership. The

:26:52.:26:55.

country's President hinted today that he was considering the

:26:55.:26:58.

possibility of a new Government. Acknowledging the growing demand in

:26:58.:27:03.

society for rulers who will take risks.

:27:03.:27:08.

1234 but in Milan, heaven for bid, they don't want to take risks with

:27:08.:27:17.

Ambrose. TRANSLATION: Italian growth won't

:27:17.:27:23.

be achieved by taking away a bank holiday. Growth requires reform of

:27:23.:27:30.

work legislation, and the introduction of interance tax.

:27:30.:27:34.

nobody will expect those in Milan to accept changes in the calendar,

:27:34.:27:39.

what is the hope they will accept big ones in their lives. Those

:27:39.:27:44.

Italians, who want the best, who will lead them? If you see that

:27:44.:27:50.

politician, please tell me. In Ambrose's time, the 4th century,

:27:50.:28:00.
:28:00.:28:00.

it was easier, a man who combined intellectual prowess w industryous

:28:00.:28:07.

and religion, he became bishop by popular axe clammation. There was a

:28:07.:28:14.

bit of good news today, or less bad news in austerity speak. The

:28:14.:28:18.

British economy grew by half paerz in the last quarter, better than

:28:18.:28:22.

expect - half a per cent, in the last quarter, better than expected.

:28:22.:28:26.

On top of that, one survey claims claims manufacturing fell into

:28:26.:28:32.

decline last month, suggesting the north of England in particular is

:28:32.:28:35.

not benefiting from even slim growth.

:28:35.:28:40.

We have been in the northest auto. This encampment in Newcastle

:28:40.:28:44.

tonight is not the scale of the one in London, they are mobilising

:28:44.:28:51.

support for a Jarrow March, which will reach the cap national next

:28:52.:28:55.

week. Lizzie thinks these growth figures

:28:55.:29:00.

as justifying her fears for the future. The fact of the last

:29:00.:29:03.

quarter with a drop because of the royal wedding. No wonder there will

:29:03.:29:08.

be growth after that happening. are not convinced it is a positive

:29:08.:29:17.

sign? Not in the slightest. It was 75 years ago this week that the

:29:17.:29:21.

foot-sore jobless men of Jarrow reached their destination. In the

:29:21.:29:24.

parts of north-east England struggling the most nowadays,

:29:24.:29:28.

unemployment is nothing like the 70% it was then. Even in the 190s,

:29:28.:29:32.

some parts of the country recovered much sooner than others, the north-

:29:32.:29:36.

east was not among them. I have come to a town not so very far from

:29:36.:29:41.

the route that the Jarrow Marchers would have taken 75 years ago, to

:29:41.:29:45.

see how the growth figures really feel. This is Middlesborough who

:29:45.:29:51.

built its wealth on steel, something commemorated in the giant

:29:51.:29:56.

sculpture behind me. Middlesborough likes to make bold statement about

:29:56.:30:01.

its future, how does that future look now. Not just as a result of

:30:01.:30:05.

today's sluggish figures, but also the cuts to the public sector,

:30:05.:30:11.

which represents about 60% of the economy in the north-east.

:30:11.:30:16.

We have a lot of stuff in here. But this year I think we have bought

:30:16.:30:20.

about half as much as what we normally buy.

:30:21.:30:24.

You would think as winter looms, insulation would be in demand. But

:30:24.:30:28.

builders aren't building, the growth figures show construction

:30:28.:30:32.

contracting by 0.6%. So Ray Ingledew's company is feeling the

:30:32.:30:36.

chill. What's been happening for you, you

:30:36.:30:42.

have been in business for 35 years? Earlier on in the year we had six

:30:42.:30:48.

vans on the road, eight vans last year. Have you had to pay people

:30:48.:30:54.

off? Yeah, we have put our labour in half this year, and you have

:30:54.:31:00.

lost good men who you won't get back again. You are a local man,

:31:00.:31:04.

what would make Middlesborough grow? It is a difficult one,

:31:04.:31:07.

certainly noing we are helping ourselves at the moment saying cut

:31:07.:31:14.

the spending. Cut the spending down stops people from working, paying

:31:14.:31:18.

any tax, they are not spending any money in the local shops or

:31:18.:31:23.

anything. Gladstone praised industrial

:31:23.:31:26.

Middlesborough as an infant Hercules, its more mature years see

:31:26.:31:32.

a flourishing of buildings. But the flow of public money is stopping,

:31:32.:31:37.

and the town will have to get used to it. That is according to the

:31:37.:31:42.

mayor. We have to save �450 million in the next two years, the

:31:42.:31:47.

Government have to deal with the deficit and the growth at the same

:31:47.:31:55.

time. That is the prerequisite to dealing with the deficit. When

:31:55.:32:01.

people don't have jobs they have not got spending power and won't

:32:01.:32:06.

help the economy. Do you think some regions are suffering less than the

:32:06.:32:11.

north-east of England? We feel in Middlesborough that we have had a

:32:11.:32:15.

raw deal. But at the end of the day. There is an awful lot of local

:32:15.:32:18.

authorities across the country that the Government have to deal with. I

:32:18.:32:21.

have had the debate with them in relation to this, I have repeated

:32:21.:32:26.

what I said, we are where we are, we are moving forward now. What we

:32:26.:32:31.

have to do as a town and nation, we have to actually believe in

:32:31.:32:36.

ourselves. And not be paralysed. 1234 This machine shows some

:32:36.:32:40.

businesses are taking the hint. Manufacturing is one sector that

:32:40.:32:44.

boosted today's third quarter significants. BMM Heaters invested

:32:44.:32:49.

thousand in a precision cutting machine that eliminates waste. It

:32:49.:32:53.

has had to look outside of the north-east. All our engineers,

:32:53.:32:58.

every week they are in Wales, London, Scotland, they are used to

:32:58.:33:02.

working away, we are beginning the work business at the moment.

:33:02.:33:06.

How much support do you think you have had as a business? Really we

:33:06.:33:09.

have been on our own over the last few years. We have made things

:33:09.:33:19.
:33:19.:33:21.

happen. We have had to get on and make the right decisions moving

:33:21.:33:23.

forward. I don't think we have had any support from the Government or

:33:23.:33:28.

anything like that, really. Helping us out financially. We have just

:33:28.:33:35.

had to make things happen ourselves, really.

:33:35.:33:39.

Joining me now is the Treasury minister now, David Gauke. You will

:33:39.:33:42.

be pleased there is some growth in the economy. You must be

:33:42.:33:45.

disappointed that the plans to rebalance in favour of

:33:45.:33:49.

manufacturing aren't working? you are right we are pleased the

:33:49.:33:53.

figures today show growth in the economy of 0.5% over the last

:33:53.:33:57.

quarter. The point about manufacturing, if you look over the

:33:57.:34:02.

last 12 months or so, manufacturing has grown by 2%. That compares to

:34:02.:34:07.

services growing by 1.2%. Actually I'm not sure I agree with that.

:34:07.:34:12.

There are obviously, always conflicting signals at various

:34:12.:34:15.

times. There is some indication that manufacturing is doing. There

:34:15.:34:19.

is not a big house in favour of manufacturing as opposed to

:34:19.:34:23.

services? You have to look at the context. Over the last few years

:34:23.:34:26.

over the previous Government, manufacturing as a proportion

:34:26.:34:29.

portion of the economy almost halved. And actually what we are

:34:29.:34:33.

seeing is manufacturing growing more quickly than services over the

:34:33.:34:37.

last 12 months. There are some encouraging signs, we want to do

:34:37.:34:41.

more, obviously. What do you say to the people in the film, we heard a

:34:41.:34:46.

businessman, we heard the Mayor of Middlesborough saying it is the

:34:46.:34:51.

wrong time to cut spending, and if you do cut there is no spending,

:34:51.:34:56.

and the economy will shrink in their area. There is a north-south

:34:56.:35:00.

divide there. If we don't have a credible plan to get the deficit

:35:00.:35:04.

down, we will see our credit rating under risk, and market interest

:35:04.:35:08.

rates increasing, that will choke off finance for businesses, it will

:35:08.:35:12.

make it more expensive for mortgage holders. It will have a damaging

:35:12.:35:15.

effect on the economy across the board.

:35:15.:35:19.

It was having more damage in the north where they are more reliant

:35:19.:35:23.

on the manufacturing jobs and theing sector is rather weak. There

:35:23.:35:29.

are a lot of things we are doing, enterprise zones, a number in the

:35:29.:35:33.

north-east of England, the Regional Growth Fun, and lots of

:35:33.:35:37.

announcements about the funding with that. That is in the north of

:35:37.:35:40.

England. Improving the infrastructure, we are spending

:35:40.:35:44.

more than the previous Government. Most people say you don't get it,

:35:44.:35:53.

your centre of gravity is in the south of London rather than the

:35:54.:36:01.

east. Danny Alexander represents people in the islands of Scotland.

:36:01.:36:06.

We are a gofment for the whole country. And we - government for

:36:06.:36:12.

the whole country, we need to take the - we are taking steps, the

:36:12.:36:17.

Regional Growth Fun, enterprise zones, infrastructure investments.

:36:17.:36:21.

That has produced a slower recovery than the great depression.

:36:22.:36:28.

reason why the economy is slow, one we inherited a lot of debts. It is

:36:28.:36:31.

difficult after a financial crisis everyone accepts recoveries are

:36:31.:36:36.

slower. We have the eurozone crisis damaging confidence. Is that

:36:36.:36:38.

worrying, what we are covering tonight. What is happening in

:36:38.:36:42.

Greece, the fact of the referendum could blow everything off course?

:36:42.:36:46.

There is no doubt that confidence has been hit in recent months in

:36:46.:36:49.

the UK because of concerns about what is going on within the Euro-

:36:49.:36:59.
:36:59.:37:01.

zon. Glrb eurozone. It is upsetting to see what we are seeing. It is up

:37:01.:37:06.

to the eurozone to take bold decisive measures to deal with

:37:06.:37:11.

their areas. In the same way this Government has to deal decisively

:37:11.:37:15.

with the big issue we face, which is a big deficit. Gang violence

:37:15.:37:18.

didn't cause the summer riots in England, but it was a factor.

:37:18.:37:22.

According to the Home Secretary. She announced new measures to deal

:37:22.:37:26.

with it. It includes earlier intervention to turn lives around,

:37:26.:37:30.

and tighter firearms laws. But the police in the Met have been using a

:37:30.:37:35.

tactic of their own, the law of joint enterprise. It allows people

:37:35.:37:41.

to be convicted of serious offences even if they took no direct part in

:37:41.:37:48.

a crime. Campaigners say it has caused criminal justice cases and.

:37:48.:37:56.

Let's look at whether the law is being abused or abused.

:37:56.:38:01.

Like summer itself, the violence of August was over very quickly in its

:38:01.:38:07.

wake is a singering bad feeling. Anger towards the looters and

:38:07.:38:11.

arsonists responsible for such lawlessness. But also anger from

:38:11.:38:20.

people who feel their grievances are unheard.

:38:20.:38:25.

No-one at this youth centre in London thinks they have answers.

:38:25.:38:32.

But they share a concern about a dusty legal law called "joint

:38:32.:38:36.

enterprise", introduced 300 years ago, which many people feel stirred

:38:36.:38:40.

up the cities. I know some boys hit with the joint enterprise charge,

:38:40.:38:46.

having been in the criminal system at the age of 13-14, coming out at

:38:46.:38:50.

the age of 26, most of their adult life in prison. Coming out I'm not

:38:50.:38:54.

too sure whether they will be able to change things around. That was

:38:54.:38:59.

the alienation you think that we saw during the riots? It was part

:38:59.:39:05.

of t I believe. All around the country, people, some of them very

:39:05.:39:08.

young, are serving lengthy sentences under joint enterprise.

:39:08.:39:12.

It means they can be charged with serious offences like murder. Even

:39:12.:39:16.

if they didn't wield a life or land a punch, I have been told of cases

:39:16.:39:19.

where they weren't even at the scene of the crime. Here in west

:39:19.:39:23.

London people have told me, it is causing huge resentment against the

:39:23.:39:28.

police. But the police say it has led to breakthroughs against gangs

:39:28.:39:32.

and the sort of violence that has marred some of the lives around

:39:32.:39:41.

here. The Metropolitan Police see joint

:39:41.:39:45.

enterprise as a valuable weapon in the fight against knife crime. They

:39:45.:39:49.

are showing this DVD in schools. Warning youngsters about what can

:39:49.:39:53.

happen if they get involved with people who carry out violence. If

:39:53.:39:57.

it is suspected they could have foreseen what happened, they too

:39:57.:40:07.

can be charged with the same offence.

:40:07.:40:10.

What I make no apologies about is how we have used this as a

:40:10.:40:17.

principle to get across what we hope is a positive, constructive,

:40:17.:40:21.

educative message which is about the most important thing we can do

:40:21.:40:25.

in these sad events, which is stop someone from being stabbed or

:40:25.:40:29.

killed. Is there a danger, do you think, that some particular groups

:40:29.:40:33.

of people, particularly young, often black youths, are going to

:40:33.:40:37.

feel unfairly targeted? I can understand that and that has been

:40:37.:40:41.

said to us. We would be foolish not to listen to that. But what, I

:40:41.:40:46.

think in return to that, we would say this, that this is an

:40:46.:40:52.

application of a principle of law which actually is very carefully

:40:52.:40:57.

applied in a very considered and detailed way, and it has a very

:40:57.:41:03.

high evidential test. But it is long been controversial.

:41:03.:41:08.

In one of the most notorious cases of joint enterprise, portrayed in

:41:08.:41:12.

the film Let Him Have It, Derek Bentley, aged 19, was hanged for

:41:12.:41:19.

the murder of a policeman during a robbery. Let him have it Chris.

:41:20.:41:23.

These were the words allegedly spoken by Bentley, which helped

:41:23.:41:27.

convict him of the shooting, eventhough it was carried out by

:41:27.:41:31.

another teenager. Joint enterprise was also used to convict three

:41:31.:41:36.

teenagers of the murder of Gary Newlove, whose savage assault by

:41:36.:41:42.

drunken youths was seen as proof of David Cameron's broken Britain. The

:41:42.:41:47.

coroner found he died from a single kick, but all three are serving

:41:47.:41:53.

life for murder. One of them, Jan Cunliffe, was 15 at time. Mr

:41:53.:42:00.

Newlove's widow says the sentence is justified. If you are saying

:42:00.:42:03.

Jordan Cunliffe didn't kill my husband, but he stood next to the

:42:03.:42:13.
:42:13.:42:14.

body saying you are doing it and you are guilty. But Jordan

:42:14.:42:22.

Cunliffe's mother says the law is being used to convict those on the

:42:22.:42:24.

periphery. Jordan had an eye condition, it meant he wouldn't

:42:24.:42:29.

have been able to see what was going on and predict there was any

:42:29.:42:33.

violence, therefore he couldn't show withdrawal, and he couldn't

:42:33.:42:36.

prevent it. Janet Cunliffe shows me new medical evidence which she

:42:36.:42:40.

wants to use to appeal against her son's conviction. It is a computer

:42:40.:42:45.

programme which shows the scene of Mr Newlove's murder, and what

:42:45.:42:48.

Jordan would have allegedly have seen because of his failing

:42:48.:42:52.

eyesight. That's the evidence that we want to use to prove that he

:42:52.:42:56.

couldn't possibly have been part of a joint enterprise.

:42:56.:43:01.

As they tackle knife crime, the Metropolitan Police admit they are

:43:01.:43:11.
:43:11.:43:11.

using joint enterprise more often. But Johann Scarlett, a youth worker

:43:12.:43:18.

from south London, says it is difficult thing. It seems to be

:43:18.:43:23.

easier to put up a case because you have to prove they are intending to

:43:23.:43:27.

do it. It goes against the whole innocent until proven guilty. It is

:43:27.:43:33.

like you are guilty, now prove you are innocent. At a local youth

:43:33.:43:36.

centre I'm introduced to youth workers and advise to they all

:43:36.:43:40.

believe young people living on estates are being criminalised.

:43:40.:43:46.

didn't stab anyone, you didn't know the knife was present, but the

:43:46.:43:50.

person died. And under joint enterprise you have all been

:43:50.:43:52.

convicted, you come out with murder under your name. You are never

:43:52.:43:57.

going to get a job, then what do you do. People have been damaged by

:43:57.:44:00.

the joint enterprise situation, if they weren't involved, the police

:44:00.:44:04.

wouldn't take their side for it. you know people this has happened

:44:04.:44:09.

to? Quite a few people. There are also concerns that the law is being

:44:09.:44:14.

used too selectively against gang violence, when there are other

:44:14.:44:19.

contexts where it could apply. the law of joint enterprise were

:44:19.:44:24.

applied to phone hacking we wouldn't have so much of a concern

:44:24.:44:27.

about getting precise evidence about who has been involved in

:44:27.:44:33.

phone hacking or who has been encouraging phone hacking.

:44:33.:44:35.

problem with investigating joint enterprise is it is very difficult

:44:36.:44:40.

to find out how widely it is being used. We have looked all over the

:44:40.:44:44.

place, the Law Commission, the Crown Prosecution Service, the

:44:44.:44:47.

Ministry of Justice, individual police forces, like the Met, who

:44:47.:44:51.

were looking into the riots, and so one has anything approaching

:44:51.:44:54.

complete figures. That is apart from campaigners, who claim that

:44:54.:45:04.

they are dealing with a surge of miscarriage of justice cases. The

:45:04.:45:14.
:45:14.:45:25.

group Here says it is fighting 256 Establishing some facts is the

:45:25.:45:31.

first priority of an MPs' inquiry into joint enterprise, which is

:45:31.:45:35.

holding hearings this week. It is a very blunt instrument, it has

:45:35.:45:39.

appalling consequences if innocent people are found guilty under this

:45:39.:45:43.

doctrine. I'm concerned about its use at the moment. I stress it is a

:45:43.:45:47.

personal opinion, the committee has yet to decide on any of it. But we

:45:47.:45:53.

have had a lot of concern from several corners, and to target

:45:53.:45:57.

youngsters is doubly inappropriate. But police are confident the law is

:45:57.:46:02.

helping to keep young people away from trouble, and has even had an

:46:02.:46:06.

impact on levels of knife crime in London. The number of young people

:46:06.:46:11.

being killed in knife attacks is going down in London, you think one

:46:11.:46:15.

reason for that is the use of the joint enterprise law? It is one of

:46:15.:46:19.

many reasons. It is not the silver bullet. I don't think we have ever

:46:19.:46:24.

said this is the measure that is going town lock everything. If it

:46:24.:46:29.

comes across as that, - to unlock everything. If it comes across as

:46:29.:46:34.

that it is wrong. We need a whole series of tactics and programmes

:46:34.:46:39.

and messages that actually say don't get involved in violence.

:46:39.:46:43.

The police say that joint enterprise has at least helped

:46:43.:46:51.

bring down knife crime. Just saying that because you are going to be

:46:51.:46:56.

done for joint enterprise will stop kids carrying knives is a lie. If

:46:56.:46:59.

one of these young boys believed someone had a problem with them,

:46:59.:47:04.

and had a weapon, what are you most likely do. What would normal boys

:47:04.:47:10.

do in the arm yar. Start arming themselves with things. Would they

:47:10.:47:18.

worry about the joint enterprise law. Would they stop? That is the

:47:18.:47:24.

thing to tackle, the need of weapons as protection. The use and

:47:24.:47:28.

possible abuse of joint enterprise is not just being investigated by

:47:28.:47:32.

MPs, potentially more decisive will be a Supreme Court judgment due

:47:32.:47:38.

later this year, about the way joint enterprise is used to take on

:47:38.:47:48.
:47:48.:47:58.

gangs, and is very much on trial. A strengthening breeze breeze

:47:58.:48:02.

touching gale-force to start the morning. Mist and low cloud across

:48:02.:48:10.

eastern areas, here we will hold on to the driest and brightist

:48:10.:48:15.

conditions. There will be cloud around, and sunshine will be on the

:48:15.:48:19.

hazy side. The breeze strengthening soon, and thicker cloud along the

:48:19.:48:24.

southern counties of England. Increasing light rain or drizzle.

:48:24.:48:27.

Southern and western parts of Wales could see some of that light rain

:48:27.:48:30.

or drizzle during the afternoon. With the south-east breeze, shelter

:48:30.:48:34.

from the hills, the north coast will see bright or sunny spells.

:48:34.:48:38.

Northern Ireland, brightness will be limited to the middle of the day,

:48:38.:48:44.

plenty of cloud and certainly for 3.00pm it turns wetter. Much of

:48:44.:48:49.

Scotland has a dry and bright day after a chilly start, those spells

:48:49.:48:54.

of hazy sunshine. A different story into Thursday. Brighter skies, but

:48:54.:48:57.

you will notice a common theme, not just across the northern half of

:48:57.:49:01.

the country, but further south will be the frequency of showers. The

:49:01.:49:06.

day starts with persistent rain across eastern areas, windy as well.

:49:06.:49:10.

In-depth investigation and analysis of the stories behind the day's headlines with Gavin Esler.

As the announcement of a Greek referendum on a European Union aid package throws the deal into doubt, Newsnight asks what is next for the eurozone.


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