Eurozone ministers set Greek bail-out deadline

"Do more" is basically what Greece was told by eurozone ministers in Brussels on Thursday.

This was despite Greece presenting a new austerity plan, which included 15,000 public-sector job cuts, liberalisation of labour laws, lowering the minimum wage from €751 (£628) per month to €600 and negotiating a debt write-off with banks.

However, the eurozone ministers said that Greece's MPs must approve the new austerity plan before it can receive the €130 billion in bail-out funds.

Brussels also demanded further budget cuts of €325 million, along with a written commitment from Athens on the implementation of the programme. However, the written commitment could be the fly in the ointment - it has faced stiff resistance from politicians, who talked of national humiliation.

The conditions are to be met by Wednesday 15 February if Greece wants the bail-out funds.

But is this a game of 'who blinks first'?

If Greece, which has an unemployment rate of 20%, does not service its debt, it may face bankruptcy and a potential exit from the eurozone.

Yet eurozone leaders are unlikely to cut Greece loose either. A Greek bankruptcy could lead to contagion and even a break-up of the eurozone, something that the eurozone leaders do not want. As Germany's Angela Merkel has said, "if the euro fails, Europe fails".

Is Italy the next Greece?

With €1.9 trillion in outstanding debt, Italy's debt burden is greater than Greece, Portugal and Spain combined.

With the potential contagion fear, it came as no surprise that Italian Prime Minister Mario Monti urged the International Monetary Fund (IMF) to be more lenient with Athens in bail-out talks to prevent "a big potential explosion".

While he welcomed the IMF's insistence that Europe erect a strong firewall to prevent debt contagion from spreading, he also said the fund should not be too rigid in how it applies its lending requirements.

On his visit to the United States, he highlighted that his 12-week-old government had already seen positive results from a €30 billion austerity package introduced last year in the midst of a political and budgetary crisis and that the drop in Italian bond yields since then was a sign of greater market confidence in the country.

Is an Italian bail-out inevitable? Azad Zangana, European economist at Schroders, considers whether a Greek-sized bail-out will be needed in Italy, and takes a look at other nations at risk of economic collapse.