Greece is likely to miss its budget-deficit targets this year in the face of a deep economic contraction that is turning out to be even more severe than forecast, government officials said Thursday, conceding that the country is likely to face demands for still more budget cuts, The Wall Street Journal reported. Greece's deficit could exceed 8.5% of gross domestic product, compared with an official forecast of 7.6%, as the government struggles to meet revenue goals, two senior Greek government officials said. The deficit is now estimated at "around 8.5%, or a bit higher.

Extensive debt forgiveness for struggling mortgages borrowers was "not a realistic option", Minister for Finance Michael Noonan has said, the Irish Times reported. Speaking to the Oireachtas Committee on Finance, Public Expenditure and Reform today, the Minister said resolutions "must be found on a case-by-case basis through open and meaningful engagement between the distressed borrower and the lender". He said there was no "magic bullet" solution to the problem.

The Halliwells partners facing a £21m High Court claim by the firm's administrators are set to enter mediation in an effort to avoid a lengthy court battle. BDO launched the claim in July against a group of 32 ex-partners - including former chairman Ian Austin - in a bid to reclaim more than £21m gained through a controversial 'reverse premium' property payout. The partners have agreed to enter mediation with the intention of settling the claim out of court, although the first meeting is unlikely to happen before the new year.

European politicians on Thursday rejected an International Monetary Fund call for banks to raise up to 200 billion euros ($290 billion) in new capital, adding to fears that policymakers may be underestimating the severity of the debt crisis. IMF chief Christine Lagarde's call on Saturday for mandatory capitalization of European banks to prevent a world recession has reignited a debate over whether they have raised sufficient capital to withstand a severe downturn.

Portugal has announced new austerity measures designed to cut its budget deficit to almost zero in under five years, promising the biggest cuts in government spending for more than 50 years, the Financial Times reported. Vítor Gaspar, finance minister, said on Wednesday the planned reduction in public expenditure by 2015 – by 7 percentage points to 43.5 per cent of gross domestic product – was “without precedent” in recent Portuguese history.

German Chancellor Angela Merkel's cabinet approved new powers for the euro zone's bailout fund on Wednesday, but she faces an uphill battle to convince party skeptics to back efforts to contain the crisis. Concerned that Germany's parliament has little control over the European Financial Stability Facility (EFSF), some members of Merkel's center-right coalition are threatening to oppose boosting its powers when the Bundestag (lower house) votes on September 29.

Euro area inflation was unchanged in August and unemployment held steady for a second month in July as economic growth in the region slowed amid a persistent sovereign debt crisis, fresh data showed on Wednesday, the International Herald Tribune reported on a Bloomberg story. The inflation rate remained at 2.5 percent after falling to that level in July, the European Union’s statistics office in Luxembourg said. The seasonally adjusted jobless rate remained at 10 percent, a separate report showed. Eurostat revised March, May and June unemployment up to 10 percent from 9.9 percent.

Norwegian oil production equipment contractor Sevan Marine ASA Wednesday announced changes to its senior management as the company continues to struggle with its finances, reporting a $639 million net loss for the second quarter, Dow Jones Daily Bankruptcy Review reported.

Ireland’s unemployment rate nudged upwards for the third consecutive month in August, with the number of people on the seasonally adjusted Live Register increasing by 1,600 as summer jobs failed to materialise with their traditional frequency, the Irish Times reported. This pushed the standardised unemployment rate up by 0.1 per cent to 14.4 per cent last month. Overall, there were 469,713 people signing on the Live Register of jobseekers benefit and allowance claimants in August on an unadjusted basis, a rise of 2,790, or 0.6 per cent, over the year.

Fears of a pronounced European slowdown strengthened on Tuesday after a closely-watched survey showed eurozone economic confidence tumbling at the fastest rate since late 2008, the Financial Times reported. The European Commission reported business and consumer confidence had dropped far more than expected in August, adding to evidence that growth across the 17-country bloc has stagnated, and threatening to fuel fears the region could fall into recession. It added to the pressure on the European Central Bank to keep interest rates firmly on hold.