FT Deutschland leads with the story this morning - sourced to several German government officials - that Angela Merkel is pushing for an involuntary Greek default. The paper writes that the German government has now concluded that Greece was insolvent and that it would have to default on its debt. Germany was now trying to persuade its European partners to accept the inevitable, but was still running into opposition from the European Commission, the ECB, and several member states, including France.

Merkel met with Nicolas Sarkozy in Berlin yesterday to discuss the strategy. Reuters quotes Sarkozy as saying that the eurozone would need to deliver a comprehensive plan by the end of the month, before the G20 in Cannes in November. They did not go into details, but said France and Germany would be ready to recapitalise their banks, and agree on joint criteria for this exercise.

Barroso says Greek default would lead to disaster

It is not hard to see that the EU might take a little longer than promised by Merkel and Sarkozy to agree a comprehensive package. As Merkel is now pressing for a Greek default, José Manual Barroso warns that of unforeseeable consequences, and a spread of the crisis, should this occur, according to an interview he gave to Bild. He makes the point that the eurozone has no experience of handling a state insolvency.