Greek cabinet backs debit crisis referendum

Greece's cabinet has given unanimous backing to a controversial plan by Prime Minister George Papandreou to hold a referendum on an EU debt rescue package.



The Prime Minister told an emergency cabinet meeting that a referendum would offer a clear mandate for austerity measures demanded by other eurozone members.



However, French President Nicolas Sarkozy said the decision surprised all of Europe.



Stock markets recorded big drops following the announcement.



Papandreou is due to meet European leaders in France today.



EU Leaders agreed on a $100 billion euro loan to Athens and a 50 per cent debt write-off.



However in return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant.