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Eurozone crisis live: Spain told to cut harder as Greek deal approved Eurozone crisis live: Spain told to cut harder as Greek deal approved
(40 minutes later)
9.08am: Andrew Tyrie, chairman of the Treasury Select Committee, argued last night that Greece should use the window of opportunity created by its new aid package to devise a way to quit the euro.
Tyrie told a dinner organised by the British Venture Capital and Private Equity Association that Greece will not be able to absorb the economic and political challenges it faces while still remaining within the currency union.
The Daily Telegraph has more details.
Tyrie generally appears to be one of the most financially astute MPs, so his comments will carry weight within Westminster. His comments on the IMF were also interesting -- agreeing that the Fund should be given more firepower, but should also take a tougher line with Europe.
8.55am: As my colleague Julia Kollewe explains here, the task of giving Europe's final, final approval to Greece will probably be made by junior offficials on Wednesday.
That's just a formality, now that the eurogroup ministers have given their approval.
8.41am: Quite a busy agenda today, with meetings continuing in Brussels, and various key players in the eurocrisis speaking - plus an interest rate decision in America.
Here's today's agenda:
• ECOFIN meeting in Brussels - all day
• UK Trade data for January 9.30am
• Germany's ZEW economic sentiment survey - 10am GMT / 11am CET
• Jens Weidmann, Bundesbank president, holds press conference 10am GMT / 11am CET
• Mario Draghi give speech on "challenges of competitiveness", Paris - 11.30am GMT
• France's Francois Baroin and Germany's Wolfgang Schäuble speak in Paris. 4.30pm GMT / 5.30pm CET
• UK Federal Reserve announces monetary policy decision - 8.15pm GMT / 2.15pm EST
8.29am: Some early action in the credit ratings world – Moody's has slashed Cyprus's credit rating into Junk status, and blamed the Greek debt deal.8.29am: Some early action in the credit ratings world – Moody's has slashed Cyprus's credit rating into Junk status, and blamed the Greek debt deal.
Moody's cuts Cyprus's sovereign rating by one notch to 'Ba1' from 'Baa3', with a negative outlook. That means the island's debt is no longer seen as investment grade.Moody's cuts Cyprus's sovereign rating by one notch to 'Ba1' from 'Baa3', with a negative outlook. That means the island's debt is no longer seen as investment grade.
Moody's warned that the Cyprus government will have to inject fresh capital into its banks to cover losses incurred through Greece's debt swap. There is, it said, a "very material risk" that the private sector will fail to provide all the new funds itself.Moody's warned that the Cyprus government will have to inject fresh capital into its banks to cover losses incurred through Greece's debt swap. There is, it said, a "very material risk" that the private sector will fail to provide all the new funds itself.
It's another sign of the knock-on effects of the Greek deal. Cyprus's banks were highly exposed to Greek debt, relative to other banks, so are disproportionately hit by the haircut taken by creditors. Cyprus itself is also frozen out of the financial markets at present, and is relying on a loan from Russia.It's another sign of the knock-on effects of the Greek deal. Cyprus's banks were highly exposed to Greek debt, relative to other banks, so are disproportionately hit by the haircut taken by creditors. Cyprus itself is also frozen out of the financial markets at present, and is relying on a loan from Russia.
8.12am: Depending how you look at it, the Eurogroup's decision on Spain last night can be seen either as a concession or an imposition.8.12am: Depending how you look at it, the Eurogroup's decision on Spain last night can be seen either as a concession or an imposition.
Here's the bare facts. The EU now wants Spain to cut its deficit in 2012 to 5.3% of GDP this year. That's less taxing than the previous target of 4.4%, but harder than 5.8% of GDP that the Madrid government set as its new target last month.Here's the bare facts. The EU now wants Spain to cut its deficit in 2012 to 5.3% of GDP this year. That's less taxing than the previous target of 4.4%, but harder than 5.8% of GDP that the Madrid government set as its new target last month.
Jean-Claude Juncker, chair of the eurogroup, argued it was vital that Spain gets its deficit in 2013 down to 3% of GDP by making tough decisions this year. He said:Jean-Claude Juncker, chair of the eurogroup, argued it was vital that Spain gets its deficit in 2013 down to 3% of GDP by making tough decisions this year. He said:
It will be the responsibility of the Spanish authorities to choose the initiatives that will have to be taken in order to bring down the budgetary deficit in 2012, what is most important is what is the target for 2013.It will be the responsibility of the Spanish authorities to choose the initiatives that will have to be taken in order to bring down the budgetary deficit in 2012, what is most important is what is the target for 2013.
What is less important, but nevertheless important, are the avenues chosen in 2012.What is less important, but nevertheless important, are the avenues chosen in 2012.
Spain's deficit is a key issue because the country came nowhere close to hitting its targets in 2011. Last year's deficit came in at 8.5%, far above the 6.0% goal. That was mainly because its regional governments failed to achieve their own targets.Spain's deficit is a key issue because the country came nowhere close to hitting its targets in 2011. Last year's deficit came in at 8.5%, far above the 6.0% goal. That was mainly because its regional governments failed to achieve their own targets.
Juncker appeared to rule out penalising Spain for last year's performance, indicating that was consigned to history. As he put it:Juncker appeared to rule out penalising Spain for last year's performance, indicating that was consigned to history. As he put it:
The figure announced previously by the Spanish government... is dead.The figure announced previously by the Spanish government... is dead.
8.05am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.8.05am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.
Overnight, European finance ministers finallly agreed that Greece's €130bn (£109bn) rescue package should proceed. Although the official stamp of approval won't come until tomorrow, this means that the Eurogroup have - at last - accepted that Greece has done everything demanded of it.Overnight, European finance ministers finallly agreed that Greece's €130bn (£109bn) rescue package should proceed. Although the official stamp of approval won't come until tomorrow, this means that the Eurogroup have - at last - accepted that Greece has done everything demanded of it.
The talks in Brussels also saw Spain move centre-stage. European leaders insisted on tougher cutbacks than prime minister Mariano Rajoy recently announced, but also abandoned their old deficit targets.The talks in Brussels also saw Spain move centre-stage. European leaders insisted on tougher cutbacks than prime minister Mariano Rajoy recently announced, but also abandoned their old deficit targets.
Is the focus of the crisis moving away from Athens, and over to Madrid?Is the focus of the crisis moving away from Athens, and over to Madrid?
As usual, we'll be tracking all the latest developments and reactions. Let us know what you think too...As usual, we'll be tracking all the latest developments and reactions. Let us know what you think too...