Greece’s prime minister has urged his fractious cabinet to work harder at fiscal and structural reform amid debate over whether the country should restructure its sovereign debt.

George Papandreou said: “We have to devote all our strength to implementing reforms in the coming months, whatever the obstacles.”

Mr Papandreou was speaking at an unscheduled cabinet meeting called after the European Union’s statistical office published figures this week showing that Greece’s budget deficit for 2010 was higher than expected at 10.5 per cent of gross domestic product.

Yields on Greek bonds soared to new highs on fears the government was losing the battle to bring its public finances under control, making a debt restructuring more likely.