From late 2009, fears of a sovereign debt crisis in some European states developed, with the situation becoming particularly tense in early 2010. Greece was most acutely affected, but fellow Eurozone members Cyprus, Ireland, Portugal, and Spain were also significantly affected.European Debt Crisis Fast Facts, CNN Library (last updated 22 January 2017).Ricardo Reis, Looking for a Success in the Euro Crisis Adjustment Programs: The Case of Portugal, Brookings Papers on Economic Activity, Brookings Institution (Fall 2015), p. 433. In the EU, especially in countries where sovereign debt has increased sharply due to bank bailouts, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany.

This was the first Eurozone crisis since its creation in 1999. As Samuel Brittan pointed out, Jason Manolopoulos "shows conclusively that the Eurozone is far from an optimum currency area". Niall Ferguson also wrote in 2010 that "the sovereign debt crisis that is unfolding... is a fiscal crisis of the western world". Axel Merk argued in a May 2011 Financial Times article that the dollar was in graver danger than the euro. This reference links to a Google search where the first result is the correct link. Following the link directly would result in the news site requiring a subscription to access the article. Going through Google allows you to access the article without paying for a subscription.

Concern about rising government deficits and debt levels across the globe together with a wave of downgrading of European government debt created alarm in financial markets. The debt crisis is mostly centred on events in Greece, where the cost of financing government debt has risen. On 2 May 2010, the Eurozone countries and the International Monetary Fund agreed to a loan for Greece, conditional on the implementation of harsh austerity measures. On 9 May 2010, Europe's Finance Ministers approved a comprehensive rescue package worth €750 billion (then almost a trillion dollars) aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility. The Greek bail-out was followed by an €85 billion rescue package for Ireland in November,Treanor, Jill and Elliott, Larry Ireland to get €85bn loan in deal that will nationalise its banks The Guardian, 24 November 2010, Retrieved 19 May 2011 and a €78 billion bail-out for Portugal in May 2011.

While the sovereign debt increases have been most pronounced in only a few Eurozone countries they have become a perceived problem for the area as a whole. In May 2011, the crisis resurfaced, concerning mostly the refinancing of Greek public debt. The Greek people generally rejected the austerity measures and have expressed their dissatisfaction with protests. In late June 2011, the crisis situation was again brought under control with the Greek government managing to pass a package of new austerity measures and EU leaders pledging funds to support the country. In May 2012 the crisis escalated to new levels following the national May 2012 Greek parliamentary election. Greek parties failed to form a coalition Government following the election and there was widespread speculation of Greece exiting the Eurozone, termed a "Grexit".

Below is a brief summary of some of the main events since the Greek government debt crisis.

2009

October October – A new Greek government led by Panhellenic Socialist Movement (PASOK) was formed after the party received 43.92% of the popular vote and 160 of 300 parliamentary seats in the Greek legislative election, 2009.

2010

January 14 January – Greece unveiled its Stability and Growth Programme which aimed to cut deficit from 12.7% in 2009 to 2.8% in 2012.

February 2 February – The Greek Government extended public sector wage freeze to those earning less than €2,000 a month. 3 February – The EU Commission backed Greece's Stability and Growth Programme and urged it to cut its overall wage bill. 10 February – Thousands of Greek civil servants staged a 24-hour strike shutting schools and grounding flights as the government planned to freeze pay and pensions. 24 February – One-day general strike against the austerity measures halted public services and transport system. 25 February – EU mission in Athens with International Monetary Fund (IMF) experts delivered a grim assessment of the country's finances.

March 5 March – New Greek public sector wage cuts and tax increases were passed to generate an estimated saving of €4.8 billion. Measures include increasing value-added tax by 2% to 21%, cutting public sector salary bonuses by 30%, increases in fuel, tobacco and alcohol consumption taxes and freezing state-funded pensions in 2010. 11 March – Greek public and private sector workers strike. 15 March – European Monetary Union (EMU) finance ministers agree on a mechanism to help Greece but reveal no details. 18 March – Papandreou warns Greece will not be able to cut deficit if borrowing costs remain as high as they are and may have to go to the IMF. 19 March – European Commission President, José Manuel Barroso urges EU member states to agree a standby aid package for Greece. Barroso says the EMU countries should be on stand by to make bilateral loans. 25 March – European Central Bank (ECB) President, Jean-Claude Trichet says his bank will extend softer rules on collateral (accepting BBB? instead of the standard A−) for longer (up to 2011) in order to avoid a situation where one ratings agency (Moody's) basically decides if an EMU country's bonds are eligible for use as ECB collateral. March – €5 billion in 10-year Greek bonds sold – orders for three times that amount are received.

April

9 April – Government of Greece announces that the deficit for the first trimester was reduced by 39,2%. 11 April – EMU leaders agree bailout plan for Greece. Terms are announced for €30 billion of bilateral loans (roughly 5% for a three-year loan). EMU |countries will participate in the amount based on their ECB country keys. Rates for variable rate loans will be 3m-Euribor plus 300 basis points (bp) + 100 bp for over three-year loans plus a one-off 50 bp charge for operating expenses. For fixed rate loans rates will be swap rate for the loan's maturity, plus the 300 bp (as in variable) plus the 100 bp for loans over three years plus the 50 bp charge. 13 April – ECB voices its support for the rescue plan. 15 April – Olli Rehn says there is no possibility of a Greek default and no doubt that Germany will participate in the bailout plan. In the meantime there had been serious objections from parts of German society to the country's participation in the Greek bailout. 23 April – Greece officially asks for the disbursement of money from the aid package effectively activating it. 27 April: Standard and Poor's downgrades Greece's debt ratings below investment grade to junk bond status. S&P downgrades Portuguese debt two notches and issues negative outlook, warning that further downgrades to junk status are likely. Stock indices around the world drop two to six per cent on the news. 28 April – S&P downgrades Spanish bonds from AA to AA−. April – Sale of more than €1.5 billion Greek Treasury bills met with "stronger-than-expected" demand, albeit at a high interest rate.

May

1 May – Protests, yearly taking place for the day, this year add "the proposed austerity measures", in Athens. 2 May – Greece announces the latest, fourth, raft of austerity measures. 3 May – The ECB announces that it will accept Greek Government bonds as collateral no matter what their rating is. This effectively means scrapping the BBB-floor in the case of Greece and increasing the likelihood of similar announcements in case other countries run the risk of being downgraded to junk status. 4 May – First day of strikes against the austerity measures. Global stock markets react negatively to fears of contagion.

5 May – General nationwide strike and demonstrations in two major cities in Greece turned violent. Three people were killed when a group of masked people threw petrol bombs in a Marfin Egnatia Bank branch on Stadiou street. 6 May – Concerns about the ability of the Eurozone to deal with a spreading crisis effectively caused a severe market sell off, particularly in the United States where electronic trading glitches combined with a high volume sell off produced a nearly 1,000-point intra-day drop in the Dow Jones Industrial Average, before it recovered somewhat to close down 347. 7 May – Volatility continued to accelerate with an increasing CBOE VIX index and a major widening in currency spreads, particularly dollar-yen and dollar-euro. 8 May – Leaders of the Eurozone countries resolved in Brussels to take drastic action to protect the euro from further market turmoil after approving a bailout plan for Greece.Lauren Frayer, "Europe Tries to Calm Fears Over Greek Debt Crisis" , AOL News. Retrieved 9 May 2010. 10 May: In the context of the Securities Markets Programme (SMP), ECB as well as the central banks of the Eurosystem started purchasing securities. 20 May – Fourth strike in Greece against wage cuts. 24 May – Greek government is announcing deficit reduction by 41.5% for the first four months. 27 May – Debate rages in UK House of Commons about the prospect of Great Britain entering a similar financial crisis. These exchanges become known as The Greek Defence. 29 May – Fitch downgrades Government of Spain bonds one notch from AAA to AA+.

June 4 June – The Hungarian PM Viktor Orbán's spokesman said it was not an exaggeration that the prospect of a national default is very real, although Moody's still affirmed that Hungary had a good record of paying its obligations. The Euro fell to a four-year low and major American markets fell more than 3%.

July 5 July – The central Bank of Greece announced a reduction of central government cash deficit by 41.8%, for the first half-year 2010.

September 5 September – Spreads on longer-term Greek government debt have surged back to crisis levels of about 800 basis points, implying a high risk of default. 7 September – Finance Ministers of the EU countries approve the second of the bailout installments for Greece (€6.5 billion). 11 September – The IMF also approves the second installment of their bailout package for Greece (€2.57 billion).

October

31 October – Angela Merkel's coalition, trailing in the German polls and with lander elections due in 2011, backs proposals to make bondholders pay for any future euro-area crises.Angela Merkel consigns Ireland, Portugal and Spain to their fate Yahoo! UK and Ireland Finance, 31 October 2010, Retrieved 17 November 2010Merkel backs plan to put burden on bondholders The Independent, 9 November 2010, Retrieved 17 November 2010

November 13 November – The potential for loss in value of government bonds or an interest holiday triggers selling of Irish debt. The 10-year Irish government bond premium surged to a record 652 basis points premium against the German bond.Global Foreign Exchange Market The Star online  13 November 2010, Retrieved 17 November 2010 16 November – Ireland started talks with the EU over a bailout. The move prompted further worry that Greece and Portugal were also in poor fiscal shape. The move follows previous denials that Ireland would need external help to alleviate its debt burden. 21 November – Ireland controversially accept an EU-IMF multibillion-euro package to help alleviate its debt burden. 22 November – Following the withdrawal of the Irish Green Party from the governing coalition, a new election is called.

2011

January

January 2011 – Fitch becomes the third rating agency to cut Greek debt to "junk" status after S&P and Moody's.

May