Greek govt on shaky ground amid shock referendum fallout

Markets plunged today over fears that Europe’s plan to save the euro was already unravelling after the decision by Greece’s leader to call a referendum on the country’s latest rescue package.

Greek Prime Minister George Papandreou saw his parliamentary majority cut to two seats today as the fallout continued from his shock decision to call a referendum on the country’s latest rescue package.

One MP defected, and at least seven more Socialists called for the formation of a cross-party, national unity government, leaving Mr Papandreou with control of 151 seats in a 300-seat house.