Threat of contagion means France could be next

French President Nicolas Sarkozy speaks during a press conference after a meeting with French bank executives over bonuses at the Elysee presidential Palace in Paris.

Steve Chiotakis: Greece has a new Prime Minister-to-be. Loukas Papademos is a former Harvard University professor and he served as vice president
of the European Central Bank.

Papademos says he wants Greece to continue to use the euro and not get kicked out of the eurozone. But there are critics who say if Greece isn't removed, the debt crisis will keep spreading.

Christopher Werth reports from London.


Christopher Werth: When the debt crisis began, it was just about Greece, then Ireland, then Portugal. All are relatively small economies. The thinking went: Europe could handle trouble there.

The bigger fear was if the contagion wasn't walled off, it could eventually infect a globally significant economy like Spain and Italy. But the line was essentially drawn there -- not anymore.

Worries are spreading to even bigger economies -- namely France -- and here's why. To some economists the French budget deficit more resembles Ireland and Portugal's rather than Germany's.

Guntrum Wolls is with the Brussels-based think-tank Bruegel.

Guntrum Wolls: Certainly France currently has a very significant deficit, much beyond the German one. And markets certainly see that difference more clearly than a couple of years ago.

He says even if the crisis is contained before it gets to France, Italy is already big enough to doom the euro.

In London, I'm Christopher Werth for Marketplace.

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