All Greece’s insistence that it would not need to activate an EU bailout plan was turned on its head yesterday as eurozone member states approved an €30 billion loans deal.

In the end it was inevitable. Commercial lenders simply would not take the risk of investing in Greek debt at normal interest rates of 4.5 per cent.

In the event, Greece would have had to borrow money at a high premium of something approaching seven per cent. Despite its austerity package, this would mean that the interest it would have to pay on the loans to refinance its debts would far outweigh any progress made in slashing its deficit.

The Greeks themselves seem reluctant to accept the fact that their economy is a shambles, that the situation has been brought about by deceit and manipulation of figures and that they definitely need help to get out of it.

To illustrate this fact, the Finance Minister made a statement in which he said that Greece has not yet requested the money and expressed confidence that the country could borrow off the commercial markets simply through increased confidence that the 22bn guarantee package would cover their payments in case of default.

This, however, is not the case, lenders will not give Greece the money at anything below seven per cent and PM George Papandreou has said that he has already considered activating the €30bn loan as quickly as possible.

Make no mistake, this is not about European solidarity. This is about the future of the common currency. If Greece (or eventually Portugal and Spain) were to default and leave the eurozone, the decade-old currency’s credibility would be so severely tarnished that even other eurozone members would find it difficult to borrow money at anything near decent interest rates. This is why those in the euro area have had to act. The format of the loan would be one which would provide €30bn over three years and would carry a five per cent interest rate. This is higher than the International Monetary Fund’s recommendation of 4.5 per cent. And this also begged the question: Why on earth was so much effort put into hammering out a deal to include the IMF in providing a guarantee package when everyone knew it was going to come to this? In all probability it was simply to placate Germany’s Angela Merkel who might have already known it was going to come to this, but was caught between a rock and a hard place in the sense that if she had not made concessions in providing the guarantee (and now loan), Germany could have been blamed for causing the euro’s implosion.

The good news is that the announcement of the deal has bolstered confidence in the euro which has gained in all the markets against the dollar and the sterling. Greece is in very dire straits. Its recent downgrading on one of the credit agencies has put it on the level of junk bond sellers, the high risk rubbish that one finds forwarded through emails, or in pamphlets through the letter box.

Now eurozone nations must act, those who are lending the Greeks this money need to badger them day after day and week after week to see what is being done. We do honestly believe that Greece is making the effort – they would be fools not to, but we need to see tangible results that show us that the country is making headway. Let us not forget, this money is coming out of the pockets of European taxpayers. And before any governments rush to say that these are commercial loans at a higher than normal premium, we also rush to say that does not mean that they will be settled in full and on time.