Greece closer to default as its borrowing costs rocket

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Greece now has to pay a yield of more than 20% to borrow money for two years, reflecting the fact that investors view it as highly likely that the country could default.

It is becoming increasingly clear that Greece cannot grow fast enough to be able to service its current debts, which are set to hit 160% of its GDP.

Reports in Greece citing an unnamed EC official said Athens realised it would have to restructure its borrowings, a statement that was today rapidly denied by a commission spokeswoman.

However, as has been the pattern for many months now, official denials were ignored by the markets. In an auction of bonds today, Greece had to pay 4.1% to borrow €1.63 billion (£1.43 billion) for just three months with a relatively small proportion of the debt being picked up by foreign investors.

Greece was given €110 billion in emergency funding by the eurozone and the International Monetary Fund last May on condition it shrunk its deficits and put in major economic reforms. The unnamed official was quoted as saying the alternative to a restructuring was for further EU and IMF loans but this was "very unlikely".