GERMAN CHANCELLOR Angela Merkel threatened to pull Germany out of the euro if her criteria for a new regime were not met, it has been reported.

The apparently barely-veiled threat came at a dinner during the EU summit on October 28. The Guardian newspaper reports that Merkel was arguing with the Greek prime minister George Papandreou about her campaign for a permanent system for dealing with a possible sovereign default, like that which threatened to strike Ireland, Greece, Portugal and Spain.

The Guardian says witnesses heard Papandreaou accuse Merkel of proposing a regime that was “undemocratic”.

Merkel allegedly replied:

If this is the sort of club the euro is becoming, perhaps Germany should leave.

The EU summit at which the remark was allegedly made was largely concerned with whether the EU should bail out Ireland or not. Germany is seen as the central power behind the euro zone’s stability – any threat for them to leave the currency would be massively damaging.

Angela Merkel’s spokesperson Steffen Seibert would not comment on the alleged remarks when they were put to him yesterday but he did say that pulling out of the euro was “not plausible”. He said:

Germany is unconditionally and resolutely committed to the euro.