The change in policy comes amid concerns that the struggling country may not be able to remain in the single currency for much longer. The EIB will also include a revised currency measure in new loans with Ireland and Portugal. And it is planning to extend it gradually to all eurozone countries.

MEP Godfrey Bloom, UK Independence Party’s economics spokesman, warned: “This act by the EIB shows that at least one institution of the European Union has raised its eyes above the parapet and seen what is going on in the real world. Of course, the EIB has to work in the markets. Not to factor in Greek withdrawal would make their balance book look decidedly dodgy.”

“That they are using English law to draw up the contracts also shows the EU, despite its bluster and transparent desire to rip chunks out of the City, recognises that London is still the place to do business.” But the EIB denied that the move indicated the bank was preparing for a Greek exit from the euro.

“Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences,” Bernanke told the Senate Budget Committee Tuesday. “Even the prospect of unsustainable deficits has costs, including an increased possibility of a sudden fiscal crisis. As we have seen in a number of countries recently, interest rates can soar quickly if investors lose confidence in the ability of a government to manage its fiscal policy.”

Bernanke said that while nobody knows when a fiscal crisis will come, it is surely “ever closer.” “Although historical experience and economic theory do not indicate the exact threshold at which the perceived risks associated with the US public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory will move the nation ever closer to that point.”

Economists say the Government will have a tougher task meeting forecasts to reduce borrowing to £120 billion in the current financial year as the economy struggles and unemployment rises, which will hurt its tax revenues and increase benefits payments. Samuel Tombs, an economist at Capital Economics, said: "March's public finance figures suggest that the trend in the UK's fiscal position is continuing to worsen."

The fact that GE paid no taxes in 2010 was widely reported earlier this year, but the size of its tax return first came to light when House budget committee chairman Paul Ryan (Republican for Wisconsin) made the case for corporate tax reform at a recent townhall meeting. "GE was able to utilize all of these various loopholes, all of these various deductions - it's legal," Ryan said.

Nine billion dollars of GE's profits came overseas, outside the jurisdiction of US tax law. GE wasn't taxed on $5 billion in US profits because it utilized numerous deductions and tax credits, including tax breaks for investments in low-income housing, green energy, research and development, as well as depreciation of property.

"I asked the GE tax officer, 'How long was your tax form?'" Ryan said. "He said, 'Well, we file electronically, we don't measure in pages.'" Ryan asked for an estimate, which came back at a stunning 57,000 pages. When Ryan relayed the story at the townhall meeting in Janesville, there were audible gasps from the crowd. Ken Kies, a tax lawyer who represents GE, confirmed to The Weekly Standard the tax return would have been 57,000 pages had it been filed on paper. The size of GE's tax return has more than doubled in the last five years.

The isolated and impoverished state sacrificed the chance of closer ties with the United States when it launched the long-range rocket on April 13 and was censured by the UN Security Council, which includes the North's sole major ally, China. Critics say the rocket launch was aimed at honing the North's ability to develop an intercontinental ballistic missile capable of hitting the United States, a move that would dramatically increase its military and diplomatic heft.

Now the North appears to be about to carry out a third nuclear test after two in 2006 and 2009. "Soon. Preparations are almost complete," the source told Reuters when asked whether North Korea was planning to conduct a nuclear test. This is the first time a senior official has confirmed the planned test and the source has correctly predicted events in the past, telling Reuters about the 2006 test days before it happened.

The rocket launch and nuclear test come as Kim Jong-un, the third of his line to rule North Korea, seeks to cement his grip on power.

Pakistan's Shaheen-1A is an intermediate range ballistic missile, capable of reaching targets in India. Military officials declined to specify the range of the missile. The missile's impact point was in the Indian Ocean. India and Pakistan have fought three full-scale wars since they were carved out of British India in 1947. They conduct missile tests regularly and inform each other in advance.

The protests against the Obama administration’s policies could be “the game-changer” in the presidential election, one leading lay churchman told Newsmax on Tuesday. The protests, dubbed “A Fortnight for Freedom” will be an “unprecedented, aggressive attack” against policies that church leaders see as an assault on religious freedom, said Catholic Advocate chairman Deal Hudson. “The bishops are seeing – rightly – a pattern of emerging of hostility towards the Catholic faith for upholding protection of the life of the unborn and because of its position on contraception,” said Hudson.

And Bill Donohue, the president of the Catholic League pointed out to Newsmax that the protests will come around the time the Supreme Court issues its judgment on the constitutionality of the Affordable Care Act, also known as Obamacare. Unless the justices throw the act out completely, the protests could not be timed better, he said. “If the individual mandate falls and the rest stands it will be more important than ever for Catholics to step forward and get involved,” said Donohue. “We will have to make the point that we are not going anywhere.”

Donohue said the mandate to make insurance companies cover not only contraceptives but abortion-inducing drugs is the key, he said. “It was done on purpose as a wedge to open the door. If we don’t fight it the next step is to force Catholic hospitals to provide abortion facilities,” he said. “The idea that I as a Catholic should have to pay for some woman’s abortion makes me want to reach for the vomit bag.”

German Chancellor Angela Merkel is running out of allies in her drive to solve the euro debt crisis through strict austerity programs. French Socialist François Hollande looks on course to oust President Nicolas Sarkozy, who has been Merkel's most important partner in the fight to overcome the debt crisis, in a run-off vote on May 6 after beating him into second place in the first round on Sunday.

And Dutch Prime Minister Mark Rutte, whose minority government has been lecturing Greece and other high-debt countries about the need for strict spending cuts, resigned on Monday after the far-right Freedom Party of populist Geert Wilders refused to back budget cuts for the Netherlands, regarded as one of the most stable economies in Europe. Across Europe, right-wing populists are on the rise, winning votes from ordinary people disenchanted with cuts that have been making their lives harder. In France, the National Front of Marine Le Pen won 17.9 percent on Sunday, the highest result a far-right candidate has ever managed in France.

German media commentators say the popular backlash against austerity threatens to bring the euro crisis back with a vengeance after leaders had managed to put a lid on it in recent months. Matters were made worse by economic data this week pointing to a further slowdown in the European economy as the purchasing managers' indices for the euro zone fell sharply this month.

However, Commission officials are expected to argue the budget increase is needed to meet prior EU commitments. The BBC's Nigel Cassidy says the Commission has to pay for a string of long-term projects, such as infrastructure and research programmes, that it is legally obliged to cover.

The Commission will risk accusations of double standards as it has been leading calls for budget discipline throughout Europe, our correspondent adds. The British government is thought to be among those who would oppose any increase.

"The UK has been consistent that at a time when member states are tightening their belts, the EU must show budgetary restraint," a British government spokesman in Brussels told Reuters news agency. Poorer member states are meanwhile expected to lobby to keep the regional spending they say is essential for growth and creating jobs.

Quite simply, in most of the countries that make up the euro zone, there is no longer a substantial majority willing to make the sacrifices needed to keep the euro currency system together. This has always been true to some extent. Commentators have long talked about the euro zone’s “democratic deficit,” meaning Europe’s economic system is largely the creation of powerful political and business interests and lacks transparency, accountability and a broad popular mandate. But up until now, support by the elites has been more than sufficient to keep the system intact.

Over the next few weeks, however, the elites are likely to start losing their grip. A number of key European countries are facing elections, and the political parties that support the euro are expected to fare badly. In the most financially troubled European countries, popular resistance to austerity policies is mounting. At the same time, in those countries that are still financially stable, the electorate is growing increasingly unwilling to keep doling out money to keep the weaker countries from insolvency.

The real problem is that as popular support for the euro diminishes across the political spectrum, governments will be less willing to take the aggressive and sometimes painful measures needed to keep the euro zone together. When leaders know that the majority — or at least a large minority — of their constituents oppose a policy and are unwilling to accept its costs, they will be tempted to stand aside and let nature take its course. And in this case, the path of least resistance is simply to deplore the failure of the euro while doing little to prevent it.

The Spanish treasury said it raised €1.933 billion but the timing could hardly have been worse, with financial markets slumping on concern that Europeans are wavering in their commitment to austerity. The sale of three-month and six-month bills came a day after Spain's central bank declared the country had plunged back into recession in the first quarter of 2012.

Markets were shaken after a first round of French presidential elections on Sunday put Socialist Francois Hollande, who wants the euro zone to focus on growth rather than austerity, ahead of incumbent Nicolas Sarkozy. The two contenders face off in a final vote May 6. Further undermining stability, the Netherlands' government collapsed yesterday after failing to reach agreement over austerity measures, placing its AAA credit rating at risk.

Industrialized and emerging nations pledged another $430 billion to boost the International Monetary Fund's lending power this weekend, doubling the size of its crisis-fighting war chest in case Europe's problems worsen and engulf more countries.

Three weeks earlier, European Union leaders set aside $1 trillion for Europe's bailout fund creating a firewall to prevent the euro zone's sovereign debt woes from spreading. Major central banks haven't finished pumping money into the global economy either.

The Federal Reserve meets on Tuesday and Wednesday and the Bank of Japan meets on Friday, and their bias toward monetary easing through bond purchases is likely to remain firmly in place. Japan may even ease again to counter deflationary pressures.

The IMF has recommended more action from the European Central Bank, and the People's Bank of China is seen cutting its bank reserve requirements this year to underpin growth. But can all this money restore growth to robust levels anytime soon? Government officials and economists point to the same problem: too much debt. Rescue funds and central bank stimulus measures are just keeping the world economy afloat until the hard and painful work of repairing balance sheets gets done.

The collapse of budget talks in the Netherlands added to market nerves. The closely-watched Purchasing Managers Index (PMI) survey suggested manufacturing activity in Germany fell to an almost three-year low of 46.3 in April. Any figure below 50 suggests contraction. Figures for the wider economy, both in Germany, France and the wider eurozone, also showed a deeper contraction.

"The flash PMI signalled a faster rate of economic contraction in the eurozone during April, extending what appears to be a double-dip recession into a third consecutive quarter," said Chris Williamson, chief economist at survey-compiler Markit.

There have been no incidents but the language has become increasingly vitriolic. Some analysts said they believe a military provocation is likely."The special actions of our revolutionary armed forces will start soon to meet the reckless challenge of the group of traitors," said a statement on the official news agency.

The North said its targets are "the Lee Myung-Bak group of traitors, the arch criminals, and the group of rat-like elements including conservative media destroying the mainstay of the fair public opinion". It said the actions "will reduce all... to ashes in three or four minutes... by unprecedented peculiar means and methods of our own style".

Tens of thousands rallied in Pyongyang last Friday, screaming hatred for Lee and calling for his death over alleged insults. Last week the nuclear-armed North accused Lee of "desecrating" mass celebrations marking the 100th anniversary on April 15 of the birth of Pyongyang's founding president Kim Il-Sung.

Mr Wilders refused to accept austerity demands to bring the budget deficit in line with EU rules. His party was not part of the coalition but supported the minority government. Dutch broadcaster Nos said Mr Rutte spent almost two hours on Monday afternoon at the queen's palace in The Hague where he made the cabinet's resignation official.

After he left, a government statement said that the queen had asked "all ministers and deputy ministers to continue to do everything that is necessary" in the Netherlands' interests. Mr Rutte's government lasted just 558 days. Only three other Dutch administrations since World War II have been in office for shorter periods, Dutch news agency ANP says.

The Dutch economy, Europe's fifth largest, has survived the eurozone crisis relatively well with a national debt of around 65% of economic output but its projected budget deficit falls foul of new EU rules requiring eurozone governments to keep below 3% of GDP. A recent forecast from the Netherlands' Central Planning Bureau estimated that the country's public deficit would rise to 4.7% of GDP.

Netherlands has been asked to submit its budget measures to the European Commission by 30 April, although it is not clear how firm that deadline is. Since 5 March, the two coalition parties along with the Freedom Party have been trying to reach agreement on budget cuts before the deadline.