Greek debts threaten the euro

European leaders at a summit in Brussels have been discussing the Greek economy and have agreed to help the country with its financial crisis. The aim is to protect the economies of countries using the euro.

This summit was supposed to be a chance for Europe's prime ministers and presidents to discuss ways to promote growth and jobs, but with the euro single currency facing its worst ever crisis, the original agenda has long since been scrapped. Instead, all the focus will be on how to shore up Greece's precarious finances. Though the Greek economy is relatively small, its membership of the euro zone means its fate is wedded to that of the stronger currencies in the single currency.

For years Greek governments have spent more than they earned in taxes and borrowed to make up the shortfall. That public debt now threatens to engulf the economy. Greece's new socialist government has introduced some drastic austerity measures, such as a public sector pay freeze and fuel price increases to try to reduce the deficit, but the prospect of a default has prompted huge falls on the Greek stock market. The uncertainty has spread to other big euro debtors like Spain and Portugal. It's this contagion that most worries euro zone leaders as it risks destroying confidence in the euro as a whole.

So what to do? By underwriting the Greeks' debts they hope to stop the financial turbulence spreading and protect themselves in the process. But such largesse is not without risk. If they do end up having to pay Greece's debts, the leaders meeting here know it will be both expensive and unpopular with the voters back home.

· scrapped

· cancelled, abandoned

· to shore up

· to support and strengthen something that is weak

· precarious

· in a fragile state and seem likely to fail

· is wedded to

· is firmly linked to; if you are wedded to someone, you are married to them

· to engulf

· to overwhelm, to become stronger than

· drastic austerity measures

· severe actions that are taken to save money and spend money only on things which are absolutely necessary

· pay freeze

· stopping all increases in wages

· a default

· a failure to make payment on a loan or debt

· underwriting

· guaranteeing to make a payment for someone else if necessary

· largesse

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Iceland vote on debt

The Icelandic Parliament will discuss the prospect of a public vote on repaying Britain and the Netherlands billions of dollars when the country's banks collapsed in 2008.

Icelandic MPs are meant to be enjoying a lengthy Christmas break, instead they've been summoned back to parliament to discuss the fall out of President Olafur Grimsson's refusal to sign a bill allowing more than five billion dollars to be paid to the British and Dutch governments.

A quarter of the population had signed a petition calling for him to withhold his signature. The money was meant to compensate the two governments after they bailed out savers put at risk when the online Icesave bank collapsed in 2008.

Now a public referendum will be held, possibly next month. But ministers have warned Iceland's bid to join the EU could be damaged, and the country risks losing desperately needed financial aid. There's also the danger of a constitutional crisis - the Prime Minister Johanna Siguroardottir said she wasn't convinced his actions were legal.

Meanwhile frantic diplomatic efforts have been made to try and build bridges with both the British and Dutch governments, and other Nordic countries who had made an agreement on refunding the compensation a condition of further aid payments.

· summoned back

· ordered to return

· the fall out

· the negative consequences

· a petition calling for him to withhold

· a formal piece of paper that a lot of people sign to ask him not to do something (here, not to sign the bill)

· to compensate

· to give money to people for some inconvenience or hardship they have had

· bailed out savers

· rescued the people who had money in the bank that the bank lost (in the financial crisis of 2008)

· a public referendum

· a public vote on an issue