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Greece exits bailout programme after eight years, but Turkish fears remain - business live Greece exits bailout programme after eight years, but Turkish fears remain - business live
(35 minutes later)
As Greece exits its bailout, new government figures show a drop in the country’s current account surplus compared to a year ago, but a rise in tourist revenues. Reuters reports:
Greece’s current account balance showed a smaller surplus in June compared to the same month a year earlier on the back of a wider trade deficit, the Bank of Greece said on Monday.
Central bank data showed the surplus fell to 210 million euros ($240.18 million) from a surplus of 737 million euros in June 2017. Tourism revenues increased to 2.33 billion euros from 2.007 billion in the same month a year earlier.
“In June the current account ... (was) down by 527 million euros year-on-year, as a result of a deterioration principally in the balance of goods and to a lesser extent in the primary income account,” the Bank of Greece said.
It said the trade gap rose by 535 million euros as imports outstripped exports, mainly the result of a worsening in the oil balance.
In January to June, Greece’s current account showed a deficit of 3.8 billion euros, up by 555 million euros year-on-year as the trade deficit widened and the primary income account surplus shrank.
In 2017 as a whole, Greece’s current account deficit reached 1.5 billion euros, down by 418 million year-on-year.
#Greece central government debt +€1.64 bln QoQ to €345.38 bln at end-June from €343.74 bln at end-March (MoF). #economy
And another reality check:
It's official! #Greece's tragedy is 'over' as its bailouts end. But #GDP still 25% smaller than before the start of the financial crisis! pic.twitter.com/iuDnh4XoAi
Here’s more on the forthcoming press conference on Greece:
Today, 🇬🇷 #Greece concludes its ESM stability support programme & @pierremoscovici will commemorate this important moment during a press conference today at 12:00 CET.📽️Watch live via @EC_AVService 👉 https://t.co/iNYlxHwPOk pic.twitter.com/KdxGLBbimg
Back in the UK, and luxury handbag marker Mulberry has seen its shares slump 26% after it warned it would take a £3m hit from House of Fraser’s administration. Our full report is here:Back in the UK, and luxury handbag marker Mulberry has seen its shares slump 26% after it warned it would take a £3m hit from House of Fraser’s administration. Our full report is here:
And G4S is down 1% after the UK ministry of justice took over HMP Birmingham from the company after drink, drugs and violence among prisoners:And G4S is down 1% after the UK ministry of justice took over HMP Birmingham from the company after drink, drugs and violence among prisoners:
Over in Turkey and the lira has edged lower again, down 1.4% at 6.09 against the dollar. But this is a far cry from its all time worst level against the US currency of 7.24 which it hit at the start of last week as economic crisis unfolded.Over in Turkey and the lira has edged lower again, down 1.4% at 6.09 against the dollar. But this is a far cry from its all time worst level against the US currency of 7.24 which it hit at the start of last week as economic crisis unfolded.
But the strain between Turkey and the US over the detention of a US pastor can be seen by the firing of gun shots at the American embassy in Ankara earlier this morning.But the strain between Turkey and the US over the detention of a US pastor can be seen by the firing of gun shots at the American embassy in Ankara earlier this morning.
Jamie McGeever at Reuters has a few sobering facts as Greece “returns to normal”:Jamie McGeever at Reuters has a few sobering facts as Greece “returns to normal”:
As Greece exits international bailout programmes, it's worth remembering:- 500k people, mostly young, emigrated- Unemployment hit 27.8% (still >20%)- Youth unemployment reached 60%- Economy shrank by 25%- Debt/GDP ballooned to 180%- Suicide & depression rates rose sharplyAs Greece exits international bailout programmes, it's worth remembering:- 500k people, mostly young, emigrated- Unemployment hit 27.8% (still >20%)- Youth unemployment reached 60%- Economy shrank by 25%- Debt/GDP ballooned to 180%- Suicide & depression rates rose sharply
Markets in Europe are marginally better as traders return to their desks after the weekend break.Markets in Europe are marginally better as traders return to their desks after the weekend break.
The FTSE 100 is up 0.33%, France’s Cac has climbed 0.32% and Germany’s Dax is 0.34% better.The FTSE 100 is up 0.33%, France’s Cac has climbed 0.32% and Germany’s Dax is 0.34% better.
Earlier Germany’s produce price index rose by 3% year on year in July, the same level as the previous month and in line with expectations.Earlier Germany’s produce price index rose by 3% year on year in July, the same level as the previous month and in line with expectations.
Today Greece returns to normal, according to Portugal’s finance minister and head of the eurogroup:Today Greece returns to normal, according to Portugal’s finance minister and head of the eurogroup:
#Greece is now in a position where it can enjoy the full extent of €A membership, abiding by same rules as every other #euro country. In that sense, Greece today returns to normal. So welcome back. Video-statement: https://t.co/W4tiHtPgzO pic.twitter.com/6HGBo735dg#Greece is now in a position where it can enjoy the full extent of €A membership, abiding by same rules as every other #euro country. In that sense, Greece today returns to normal. So welcome back. Video-statement: https://t.co/W4tiHtPgzO pic.twitter.com/6HGBo735dg
Giorgos Papakonstantinou, who was finance minister when Greece signed up to the bailout, said he would do the same again if the country was in the same position.Giorgos Papakonstantinou, who was finance minister when Greece signed up to the bailout, said he would do the same again if the country was in the same position.
He told the BBC’s Wake up to Money programme:He told the BBC’s Wake up to Money programme:
The choice we had at that point was either to allow the country to go bankrupt by not paying our debts... at which point we would not have been able to pay salaries and pensions and provide basic public services.The choice we had at that point was either to allow the country to go bankrupt by not paying our debts... at which point we would not have been able to pay salaries and pensions and provide basic public services.
Or to sign a bailout which would give us time to reduce those deficits.Or to sign a bailout which would give us time to reduce those deficits.
But he admitted there had been tremendous pain and suffering along the way as austerity measures hit hard.But he admitted there had been tremendous pain and suffering along the way as austerity measures hit hard.
And Zsolt Darvas of the Bruegel think tank said Greece could still face further problems. Speaking on BBC Radio 4’s Today programme, he said:And Zsolt Darvas of the Bruegel think tank said Greece could still face further problems. Speaking on BBC Radio 4’s Today programme, he said:
Unfortunately I give a high probability that Greece will enter a new crisis three to five years from now, partly because Greece still has a very high level of debt and it has to repay a lot in the near term.Unfortunately I give a high probability that Greece will enter a new crisis three to five years from now, partly because Greece still has a very high level of debt and it has to repay a lot in the near term.
If Greece’s growth slows down long-term, then markets might become very nervous and Greece will enter a new crisis.If Greece’s growth slows down long-term, then markets might become very nervous and Greece will enter a new crisis.
European markets are expected to make a mixed start to the week:European markets are expected to make a mixed start to the week:
European Opening Calls:#FTSE 7555 -0.05%#DAX 12233 +0.18%#CAC 5355 +0.18%#MIB 20370 -0.22%#IBEX 9425 +0.08%European Opening Calls:#FTSE 7555 -0.05%#DAX 12233 +0.18%#CAC 5355 +0.18%#MIB 20370 -0.22%#IBEX 9425 +0.08%
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s a momentous day for Greece and its government led by prime minister Alexis Tsipras. After eight years and innumerable late night eurozone crisis meetings, the country is exiting its bailout programme. The so-called troika of creditors - the European Union, the European Central Bank and the International Monetary Fund loaned Greece a total of €289bn in three tranches in 2010, 2012 and 2015.It’s a momentous day for Greece and its government led by prime minister Alexis Tsipras. After eight years and innumerable late night eurozone crisis meetings, the country is exiting its bailout programme. The so-called troika of creditors - the European Union, the European Central Bank and the International Monetary Fund loaned Greece a total of €289bn in three tranches in 2010, 2012 and 2015.
The country is now free to borrow money on the capital markets, something it has not been able to do while the bailout programme was underway. But it has suffered under tough austerity measures demanded by its creditors, and everyone involved understands there is still a long way to go.The country is now free to borrow money on the capital markets, something it has not been able to do while the bailout programme was underway. But it has suffered under tough austerity measures demanded by its creditors, and everyone involved understands there is still a long way to go.
Here is our report on the news:Here is our report on the news:
Later this morning Pierre Moscovici, the EU’s economic affairs commissioner, is expected to hail Greece’s exit from the bailout. But our economics editor Larry Elliott says the programme has been a failure:Later this morning Pierre Moscovici, the EU’s economic affairs commissioner, is expected to hail Greece’s exit from the bailout. But our economics editor Larry Elliott says the programme has been a failure:
It is a tale of incompetence, of dogma, of needless delay and of the interests of banks being put before the needs of people. And there will be long-term consequences. When Greece first received help in 2010, the plan was for it to have access to the financial markets within two years. It has taken two further rescue packages and six years for that to happen.It is a tale of incompetence, of dogma, of needless delay and of the interests of banks being put before the needs of people. And there will be long-term consequences. When Greece first received help in 2010, the plan was for it to have access to the financial markets within two years. It has taken two further rescue packages and six years for that to happen.
His full analysis is here:His full analysis is here:
Elsewhere Turkey is likely to remain in focus after the recent collapse of the lira and concerns that its economic problems will spread elsewhere. David Madden, market analyst at CMC Markets UK, said:Elsewhere Turkey is likely to remain in focus after the recent collapse of the lira and concerns that its economic problems will spread elsewhere. David Madden, market analyst at CMC Markets UK, said:
The slump in the Turkish lira is on traders’ minds as the fear of contagion into the eurozone is likely to remain a dominant theme. It was reported that emerging market funds were already trimming their exposure to the country in July, and that was even before the severe decline in the lira. Over the weekend, the central banks of Qatar and Turkey signed a currency swap agreement, and this follows on from the $15 billion that the gulf state pledged to invest in the country. Dealers are still scared that banks that have lent money to Turkish finance houses could face defaults, and it is possible we might see an increase in non-performing loans in the Turkish banking system, and that could seep into the eurozone.The slump in the Turkish lira is on traders’ minds as the fear of contagion into the eurozone is likely to remain a dominant theme. It was reported that emerging market funds were already trimming their exposure to the country in July, and that was even before the severe decline in the lira. Over the weekend, the central banks of Qatar and Turkey signed a currency swap agreement, and this follows on from the $15 billion that the gulf state pledged to invest in the country. Dealers are still scared that banks that have lent money to Turkish finance houses could face defaults, and it is possible we might see an increase in non-performing loans in the Turkish banking system, and that could seep into the eurozone.
Jasper Lawler, head of research at London Capital Group, says there could be more volatility ahead:Jasper Lawler, head of research at London Capital Group, says there could be more volatility ahead:
Turkish markets are closed this week, which means volumes will be particularly low, therefore big swigs could be expected potentially unnerving traders once again.Turkish markets are closed this week, which means volumes will be particularly low, therefore big swigs could be expected potentially unnerving traders once again.
On a more positive note, traders are hopeful that a planned meeting this week between Chinese and US representatives may ease some of the trade war fears that have overshadowed the markets in recent months.On a more positive note, traders are hopeful that a planned meeting this week between Chinese and US representatives may ease some of the trade war fears that have overshadowed the markets in recent months.