Greece in crisis: How European debt problems affect you

26/09/12

Greek workers stage one-day strike

A 24-hour general strike is underway in Greece, the first since the country's new government came to power in June.

Doctors, teachers, tax workers, ferry operators and air traffic controllers are all joining the walkout.

It is in protest at planned additional spending cuts worth more than $15 billion (£9bn).

The additional cuts are a condition for receiving the next slice of the international bailout (without which Greece would face bankruptcy within weeks.)

Thousands of police are on duty in the centre of Athens to stop violence which has marked previous protests.

But why might the problems in the eurozone make any difference to you?

What is the eurozone?

This is the name given to 17 European countries which use the euro, including France, Germany, Spain and Ireland.

What is the problem?

Greek workers stage one-day strike
Image caption Greek Communist party march to the parliament in Athens

Several countries in the eurozone have borrowed and spent too much since the global recession, losing control of their finances.

Greece was the first to take a multi-billion pound bailout from other European countries in May 2010, followed by Portugal and Ireland.

Their governments had to agree to spending cuts before the loans were approved.

Greece needs the next 31bn euro instalment of its international bailout.

What's going on in Greece?

With record unemployment, many Greek people don't want any more tax rises and public sector job losses.

But tough spending plans have been pushed through so the government can receive billions in bailout money.

The country was given a 110bn euro package in May 2010 and a further 130bn euros in October 2011.

That money is paid in instalments, but it's thought donors are unhappy handing over the latest slice because they feel Greece hasn't made enough effort to meet its targets.

Greece needs the next part of its bailout to make repayments on its debt.

A default could result in the country leaving the euro.

The government is also talking about cutting pensions and raising the retirement age to 67.

Where does the UK come into this?

As the UK is not in the euro, it hasn't contributed to Greece's bailout, except through its membership of the IMF, which lends to countries around the world.

But some British banks have lent money to Greece and would lose money if the country went bankrupt.

If the banks are hit hard there could be another credit crunch across Europe, making it much harder for British people and businesses to borrow cash for loans and mortgages.

Companies in the UK also do many of their trade deals with firms in Europe, so financial problems overseas would affect British business too.