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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)
12.21pm: Hopes that Germany will avoid recession were bolstered by the news today that German investor confidence rose for the fourth month in a row, hitting the highest level since mid-2010.
The ZEW institute said its confidence index rose to 22.3 points in March from 5.4 in February, a better performance than the rise to around 12 that economists had expected and the best since June 2010.
ZEW president Wolfgang Franz said:
In Germany, due to the good employment situation, domestic demand is likely to continue to stimulate growth.
11.55am: A remarkable photograph of John-Claude Juncker appearing to throttle Spain's finance minister is circulating today.
The picture, taken in Brussels yesterday, shows the the eurogroup president with both hands around the neck of Luis de Guindos. As you can see:
That's from our photo library, along with photos of the pair holding serious discussions afterwards (with de Guindos looking a little pinker than usual)
UPDATE: This video clip shows the moment happen. Contrary to my earlier suggestion, it was a momentary event (the press snappers just fired off plenty of pictures of it). Many thanks to reader Michael Bimmler for finding it.
Open Europe, the think tank, say the image could be an apt metaphor, saying:
The eurozone chokes Spain....the fiscal compact in action?
Older readers may remember the classic joke about how every time prime minister Harold Macmillan returned from a journey abroad Rab Butler was at the bottom of the steps, ready to grip him warmly by the throat (Butler having been defeated in a leadership battle by the future 1st Earl of Stockton).
11.21am: Looking around the eurozone, there is more evidence that Ireland's property market remains in the doldrums.11.21am: Looking around the eurozone, there is more evidence that Ireland's property market remains in the doldrums.
Average house prices have now fallen to just 68% of their value during the Celtic Tiger boom, according to a Goodbody's survey released today. Potential buyers also face a credit squeeze -- with mortgage lending levels back to what they were in 1971.Average house prices have now fallen to just 68% of their value during the Celtic Tiger boom, according to a Goodbody's survey released today. Potential buyers also face a credit squeeze -- with mortgage lending levels back to what they were in 1971.
Henry McDonald reports from Dublin:
/> 		Henry McDonald reports from Dublin:

The average price of Irish residential property sold recently at five Allsop Space Auctions held in Dublin over the past year was €145,000.
Goodbody's report found that tight credit conditions from banks still coping with toxic loans, an oversupply of empty properties and low domestic demand are the main factors in keeping the country's property market depressed.
The average price of Irish residential property sold recently at five Allsop Space Auctions held in Dublin over the past year was €145,000.
Goodbody's report found that tight credit conditions from banks still coping with toxic loans, an oversupply of empty properties and low domestic demand are the main factors in keeping the country's property market depressed.
The property crash in the Republic is also having a knock on effect on house prices north of the border in Northern Ireland. Northern Ireland are down by as much as 70% from their peak, the Royal Institution for Chartered Surveyors said today.The property crash in the Republic is also having a knock on effect on house prices north of the border in Northern Ireland. Northern Ireland are down by as much as 70% from their peak, the Royal Institution for Chartered Surveyors said today.
There are fears that once so-called NAMA properties (houses, apartments and offices taken over by the Irish state from bankrupt speculators and their banks) flood the market in Northern Ireland house prices could fall even further.There are fears that once so-called NAMA properties (houses, apartments and offices taken over by the Irish state from bankrupt speculators and their banks) flood the market in Northern Ireland house prices could fall even further.
Another sign that the crisis has a long way to play out....Another sign that the crisis has a long way to play out....
11.06am: Athens has been 'welcoming' Horst Reichenbach, head of of the European Commission special task force for Greece. who arrived last night.11.06am: Athens has been 'welcoming' Horst Reichenbach, head of of the European Commission special task force for Greece. who arrived last night.
Helena Smith, our correspondent, says Reichenbach has been busy telling Greek TV channels that "Greece will succeed."Helena Smith, our correspondent, says Reichenbach has been busy telling Greek TV channels that "Greece will succeed."
Helena writes:Helena writes:
The soft-spoken German has gone out of his way to tell Greeks he is not here "to exercise power but to support the country's administration." "I am sure Greece will make it," he told the state-run NET TV channel.The soft-spoken German has gone out of his way to tell Greeks he is not here "to exercise power but to support the country's administration." "I am sure Greece will make it," he told the state-run NET TV channel.
Key to development and growth and thus Greece's economic rejuvenation is the "extra liquidity" that will come with the recapitalisation of the country's banking system to help boost its cash-starved marketplace and crumbling productive base of small and medium sized enterprises.Key to development and growth and thus Greece's economic rejuvenation is the "extra liquidity" that will come with the recapitalisation of the country's banking system to help boost its cash-starved marketplace and crumbling productive base of small and medium sized enterprises.
"The next great task [after the debt relief] is to recapitalise the Greek banks and I hope everything will go smoothly," he told Mega TV.

Readers will recall that Greece has experienced a capital flight in excess of €60bn since the crisis first erupted in December 2009, with just under €20bn of that amount being squirreled into accounts abroad - mostly in the UK.

The European Financial Stability Facility weighed in with the same message Monday night announcing that Athens is on line to receive €48bn in loans from the eurozone for the recapitalization of its banks.		"The next great task [after the debt relief] is to recapitalise the Greek banks and I hope everything will go smoothly," he told Mega TV.

Readers will recall that Greece has experienced a capital flight in excess of €60bn since the crisis first erupted in December 2009, with just under €20bn of that amount being squirreled into accounts abroad - mostly in the UK.

The European Financial Stability Facility weighed in with the same message Monday night announcing that Athens is on line to receive €48bn in loans from the eurozone for the recapitalization of its banks.
Reichenbach has often been portrayed as playing 'good cop' to Greece. The 'bad cop' are the EU and IMF inspectors regularly deployed to Greece to monitor its public finances.

But how long Greeks will put up with his charm offensive is far from sure, Helena says:		Reichenbach has often been portrayed as playing 'good cop' to Greece. The 'bad cop' are the EU and IMF inspectors regularly deployed to Greece to monitor its public finances.

But how long Greeks will put up with his charm offensive is far from sure, Helena says:
The media is also full of reports that the EU task force is about to dispatch scores of Germans to "take over" the state's leaky tax collective system and dozens of French experts to oversee its problem-plagued public administration.The media is also full of reports that the EU task force is about to dispatch scores of Germans to "take over" the state's leaky tax collective system and dozens of French experts to oversee its problem-plagued public administration.
10.47am: Just in, European finance ministers meeting in Brussels have given their approval to the "adjusted measures for Greece" (ie, its second rescue package).10.47am: Just in, European finance ministers meeting in Brussels have given their approval to the "adjusted measures for Greece" (ie, its second rescue package).
That means that all 27 finance ministers from across the EU have given the green light, after last night's vote of approval from the eurozone.That means that all 27 finance ministers from across the EU have given the green light, after last night's vote of approval from the eurozone.
10.18am: Profits at Germany's central bank have more than halved, as it prepares to suffer the cost of the eurozone crisis.10.18am: Profits at Germany's central bank have more than halved, as it prepares to suffer the cost of the eurozone crisis.
The Bundesbank reported that profits in 2011 fell to €643m, from €2.2bn in 2010, as it rasied its risk provisions (covering potential losses on credit, exchange rate swaps and gold reserves) by €4.1bn.The Bundesbank reported that profits in 2011 fell to €643m, from €2.2bn in 2010, as it rasied its risk provisions (covering potential losses on credit, exchange rate swaps and gold reserves) by €4.1bn.
The figures show that the Bundesbank is increasingly concerned that central banks will eventually pay a high price for the eurocrisis. President Jens Weidmann said:The figures show that the Bundesbank is increasingly concerned that central banks will eventually pay a high price for the eurocrisis. President Jens Weidmann said:
The main reason for the decline in profitability is the increase in risk provisions.The main reason for the decline in profitability is the increase in risk provisions.
The counterparty credit risks arising from the government bond purchase programme and refinancing business have increased perceptibly as a result of the larger volume and the higher degree of risk.The counterparty credit risks arising from the government bond purchase programme and refinancing business have increased perceptibly as a result of the larger volume and the higher degree of risk.
The noises of disapproval from Germany over the European Central Bank's actions have been growing in recent weeks. Recently, Weidmann himself called for a return to more conventional monetary policy.The noises of disapproval from Germany over the European Central Bank's actions have been growing in recent weeks. Recently, Weidmann himself called for a return to more conventional monetary policy.
UPDATE: In the readers comments below, ratpack2233 points out that Weidmann has intensified his attack on the ECB. In particular, he is concerned that the ECB's payments system called Target2 has left the Bundesbank with claims worth more than €550bn against other eurozone members. Full story in FAZ, but ratpack2233's done a handy summary.UPDATE: In the readers comments below, ratpack2233 points out that Weidmann has intensified his attack on the ECB. In particular, he is concerned that the ECB's payments system called Target2 has left the Bundesbank with claims worth more than €550bn against other eurozone members. Full story in FAZ, but ratpack2233's done a handy summary.
10.01am: European financial markets are in good spirits this morning, with the FTSE 100 up 43 points at 5936, a rise of 0.75%. The French CAC and the German DAX are both up just over 1%.10.01am: European financial markets are in good spirits this morning, with the FTSE 100 up 43 points at 5936, a rise of 0.75%. The French CAC and the German DAX are both up just over 1%.
Any relief over Greece may be only short-term. Rebecca O'Keeffe, head of investment at Interactive Investor, said traders are already talking about how long we will have to wait for the next crisis:Any relief over Greece may be only short-term. Rebecca O'Keeffe, head of investment at Interactive Investor, said traders are already talking about how long we will have to wait for the next crisis:
Before the ink is even dry on Greece's second bailout, the question that is being asked is how long it will take before Europe has to go into round three, and who the main player in round three will be? Current favourite is Spain, where the focus of attention has swiftly moved, and their deficit reduction plans.Before the ink is even dry on Greece's second bailout, the question that is being asked is how long it will take before Europe has to go into round three, and who the main player in round three will be? Current favourite is Spain, where the focus of attention has swiftly moved, and their deficit reduction plans.
9.45am: Britain's exports to non-EU countries posted a record increase in January, according to the latest UK trade figures, released at 9.30am.9.45am: Britain's exports to non-EU countries posted a record increase in January, according to the latest UK trade figures, released at 9.30am.
Overall, the figures show that Britain's deficit with the rest of the world has increased, but by less than expected. The total balance of goods and services hit -£1.762bn in January, up from -£1.217bn in December.Overall, the figures show that Britain's deficit with the rest of the world has increased, but by less than expected. The total balance of goods and services hit -£1.762bn in January, up from -£1.217bn in December.
As usual, a large deficit in exports vs imports of physical goods was partly countered by a large surplus in services. Here's the data for January:As usual, a large deficit in exports vs imports of physical goods was partly countered by a large surplus in services. Here's the data for January:
Goods balance -£7.532bn (vs -£7.184bn in December)
Exports £26.063bn (vs £25.563bn in December)
Imports £33.595bn (vs £32.747bn in December)
Services balance £5.786bn (vs 5.951bn in December)		Goods balance -£7.532bn (vs -£7.184bn in December)
Exports £26.063bn (vs £25.563bn in December)
Imports £33.595bn (vs £32.747bn in December)
Services balance £5.786bn (vs 5.951bn in December)
Total trade balance -£1.762bn (vs -£1.217bn in December)Total trade balance -£1.762bn (vs -£1.217bn in December)
Economists reckon that the data is encouraging, showing that UK industry is coping quite well in the face of the eurocrisis. George Osborne should also be cheered. Philip Shaw of Investec said the figures were "fairly encouraging" for deficit reduction.Economists reckon that the data is encouraging, showing that UK industry is coping quite well in the face of the eurocrisis. George Osborne should also be cheered. Philip Shaw of Investec said the figures were "fairly encouraging" for deficit reduction.
9.28am: Has the EU opened a can of worms by agreeing that Spain shouldn't be forced to stick to its original deficit targets (see 8.12am for details)?9.28am: Has the EU opened a can of worms by agreeing that Spain shouldn't be forced to stick to its original deficit targets (see 8.12am for details)?
Sony Kapoor, managing director of the Re-Define economic thinktank, argues that Spain is now the 'test case' for how Europe attempts to control the budgets of member states, in the brave new world of the Treaty on Stability, Co-ordination and Governance (the 'fiscal pact').Sony Kapoor, managing director of the Re-Define economic thinktank, argues that Spain is now the 'test case' for how Europe attempts to control the budgets of member states, in the brave new world of the Treaty on Stability, Co-ordination and Governance (the 'fiscal pact').
Kapoor said we should:Kapoor said we should:
Expect the battle about permissible levels of Spanish deficits to be replayed across a growing number of Euro area Member States.Expect the battle about permissible levels of Spanish deficits to be replayed across a growing number of Euro area Member States.
Efforts to cut deficits too quickly in Spain could easily turn self-defeating particularly given the record levels of unemployment, the fragile state of the housing market and the weakness of the banking system.Efforts to cut deficits too quickly in Spain could easily turn self-defeating particularly given the record levels of unemployment, the fragile state of the housing market and the weakness of the banking system.
Elisabeth Afseth of Investec said Mariano Rajoy had been given a 'telling off' for setting unilateral deficit targets last month (heck, he's only the prime minister), and also queried whether the fiscal compact had much teeth -- as many European countries failed to stick to the dusty old Stability and Growth Pact (France and Germany, for example).Elisabeth Afseth of Investec said Mariano Rajoy had been given a 'telling off' for setting unilateral deficit targets last month (heck, he's only the prime minister), and also queried whether the fiscal compact had much teeth -- as many European countries failed to stick to the dusty old Stability and Growth Pact (France and Germany, for example).
Afseth said:Afseth said:
As all women know a compact is a concealer and foundation all in one (some would argue the fiscal compact is a better concealer than foundation). Very handy, but if it takes a bit of a knock there will be a lot of mess and you might as well just throw it out as it would be easier to put Humpty Dumpty together again.As all women know a compact is a concealer and foundation all in one (some would argue the fiscal compact is a better concealer than foundation). Very handy, but if it takes a bit of a knock there will be a lot of mess and you might as well just throw it out as it would be easier to put Humpty Dumpty together again.
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.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.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.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.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.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.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.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: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		• 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...