12/05/2012 09:07 BST | Updated 12/07/2012 06:12 BST

Greece Debt Crisis: Coalition Talks Collapse, Elections Look Set For June

Greece looks set to hold another round of elections next month after talks between its main parties to form a coalition collapsed.

Sky News said that the last-ditch effort to form an emergency government had ended without agreement, and that after several failed attempts to form a joint leadership, new elections would now be held in five weeks time on 17 June.

Socialist leader Evangelos Venizelos was the third and last leader to try and form a coalition, but it now appears that no breakthrough was possible.

The news could plunge the eurozone into a fresh crisis, as Greece remains under huge pressure to push through massive austerity cuts before it can receive fresh bailout money from the IMF and European Union.

A fresh package of budget cuts must be implemented in June in order to receive loans worth 240bn euros.

Without a stable government in place the possibility remains that Greece could default on its debts and be forced to leave the eurozone.

Last Sunday voters in Greece punished the main parties and flocked to those opposing the bailout.

Pasok, the party which is seen as leading the push for austerity cuts, came third, winning just 41 seats out of 300 in the Greek parliament. The New Democracy party, which had been in coalition with Pasok, also lost support.

According to the European Commission Greece's economy will contract by 4.7% in 2012, and is unlikely to grow in 2013.

Analysts and credit agencies including Fitch have warned that the re-run elections will be "critical" for the eurozone and for Greece.