Greece to hold referendum on EU bailout

Greece will hold a referendum to approve a second EU bail-out deal, less than a week after it was agreed with international creditors at a European Union summit, the Financial Times reports.

Greek Prime Minister George Papandreou said he was confident voters would give him support to forge ahead with economic reforms.

"For the new agreement, we must go to a referendum for Greeks to decide," Papandreou told lawmakers of his ruling PanHellenic Socialist Movement (Pasok) party, Bloomberg reports. "Democracy is alive and well and Greeks are being called to rise to a national duty beyond the regular electoral processes."

Papandreou did not set a specific date for the vote, although The Telegraph reports that January is likely.

The move is risky, as a failure by Greeks to approve the bailout may pushing the country into default.

The referendum also "looked likely to cause alarm in Brussels, Paris and Berlin," the FT reports, as Papandreou had made assurances that Greece would institute "a steady pace of reform," leading to a deal to slash the country's mountain of debt by nearly a third.

It is also likely to rattle investors skeptical about whether European governments — namely those of Greece and Italy — "will be able to drive through the tough austerity measures demanded by the agreements,"  the Telegraph reports.