Greece becomes hot-button issue in Germany

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Germany's ruling coalition has tried to avoid the issue of Greece ahead of national elections on September 22, but the hot button issue is back with a vengeance after the country's finance minister said Athens would need a third bailout.

Just hours before the comments from Wolfgang Schaeuble, Chancellor Angela Merkel had said there was no point talking about Greece before the end of the year when its second bailout package will expire.

Speaking at a campaign event in Hamburg, Schaeuble said: "There will have to be another program in Greece" to help the country "get over the hill."

(Read more: German elections are a 'close call': Merkel )

It didn't take long for the opposition Social Democratic Party (SPD) to jump on the finance minister's faux pas.

Carsten Schneider, the SPD budget spokesman said Schaeuble had really "let the cat out of the bag."

"Now it's time for Frau Merkel to tell people the truth," Peer Steinbrueck, the leader of the opposition SPD party said.

Even the former German chancellor Gerhard Schröder weighed into the debate, using the opportunity to lambast Chancellor Merkel's handling of Greece.

Greece's two bailouts which have cost 240 billion euros are highly unpopular in Europe's largest economy, which has had to shoulder most of the burden. Despite several debt write-offs, the country's debt-to-GDP burden remains at 160.5 percent and Greece is now in its sixth year of recession .

According to a number of reports, Greece could need up to 10 billion euros more as soon as September as it tried to plug a funding gap . Economists at Capital Economics said in a note that they wouldn't be surprised if Greece ended up defaulting again.

(Read more: Greece faces September funding gap: Report )

That could put Germany on the hook for even more money.

Adding fuel to the fire, the European Union's economic and monetary affairs commissioner Olli Rehn said on Wednesday that Greece could need a third bailout package but that lenders had other options to keep its aid program going.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt



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