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| Eurozone crisis live: Spain now in the spotlight as troika returns to Greece | Eurozone crisis live: Spain now in the spotlight as troika returns to Greece |
| (40 minutes later) | |
| 2.12pm: Hints that the Federal Reserve could step in with a third round of quanitative easing to boost jobs. My colleague Nick Fletcher reports Ben Bernanke's speech to the National Association ofor Business Economics, in which the chairman of the Federal Reserve said the economy was not growing quickly enough to bring down the unemployment rate. Bernanke said: | |
| Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies. | |
| CNN's Paul La Monica asks hopefully: | |
| 0% interest rates forever?; Paul La Monica (@LaMonicaBuzz) March 26, 2012 | |
| 1.59pm: Germany is prepared to allow up to €700m of borrowing by running the two European bailout funds in "parallel", German Chancellor Angela Merkel said Monday. | 1.59pm: Germany is prepared to allow up to €700m of borrowing by running the two European bailout funds in "parallel", German Chancellor Angela Merkel said Monday. |
| The European Stability Mechanism, which could total up to €500bn, is due to start operating this summer, replacing the European Financial Stability Facility, which has already committed €200bn for Greece, Portugal and Ireland. | The European Stability Mechanism, which could total up to €500bn, is due to start operating this summer, replacing the European Financial Stability Facility, which has already committed €200bn for Greece, Portugal and Ireland. |
| Merkel told a conference of her ruling Christian Democrat party: | Merkel told a conference of her ruling Christian Democrat party: |
| We can imagine that these €200bn could run in parallel to the €500bn of the ESM until they have been paid back by the countries. That will take several years, and then the ESM will stand alone with the €500bn. | We can imagine that these €200bn could run in parallel to the €500bn of the ESM until they have been paid back by the countries. That will take several years, and then the ESM will stand alone with the €500bn. |
| 12.42pm: Reuters newsflash: GERMANY'S MERKEL WE CAN IMAGINE 200 BLN EUROS OF THE EFSF RUNNING IN PARALLEL WITH THE 500 BLN EUROS OF THE ESM | 12.42pm: Reuters newsflash: GERMANY'S MERKEL WE CAN IMAGINE 200 BLN EUROS OF THE EFSF RUNNING IN PARALLEL WITH THE 500 BLN EUROS OF THE ESM |
| 12.22pm: The Eurozone crisis may "still have the potential to bring a lot of bad news", according to Rabobank currency strategist Jane Foley. | 12.22pm: The Eurozone crisis may "still have the potential to bring a lot of bad news", according to Rabobank currency strategist Jane Foley. |
| Markets are worried the Spanish government's resolve may be weakening ahead of a budget on Friday. The Spanish government is battling recessionary conditions, and fears that too much austerity may trigger a depression. Foley writes: | Markets are worried the Spanish government's resolve may be weakening ahead of a budget on Friday. The Spanish government is battling recessionary conditions, and fears that too much austerity may trigger a depression. Foley writes: |
| The weekend's news is a reminder that the Eurozone crisis may still have the potential to bring a lot of bad news. | The weekend's news is a reminder that the Eurozone crisis may still have the potential to bring a lot of bad news. |
| She also comments on rumours that the European Central Bank was in the market on Friday buying bonds: | She also comments on rumours that the European Central Bank was in the market on Friday buying bonds: |
| We won't know for a few days yet whether or not the ECB really did buy bonds last Friday although the fact that the market is even talking about it suggests that the impact of the February LTRO is beginning to wear thin. | We won't know for a few days yet whether or not the ECB really did buy bonds last Friday although the fact that the market is even talking about it suggests that the impact of the February LTRO is beginning to wear thin. |
| 11.38am: Italian and Spanish bond yields are easing following reports that Germany is ready to combine the firepower of two European bailout funds. | 11.38am: Italian and Spanish bond yields are easing following reports that Germany is ready to combine the firepower of two European bailout funds. |
| Spanish 10 year treasuries fell 0.079 basis points to 5.308%, while Italian 10 year yields were 0.04 basis points lower than Friday at 5.011%, and are expected to remain around that level before auctions of up to €7.5bn of medium to longer term debt on Thursday. | Spanish 10 year treasuries fell 0.079 basis points to 5.308%, while Italian 10 year yields were 0.04 basis points lower than Friday at 5.011%, and are expected to remain around that level before auctions of up to €7.5bn of medium to longer term debt on Thursday. |
| European Union finance ministers meet in Copenhagen on Friday to plan a financial firewall to fend off the crisis threatening to engulf the southern European nations. | European Union finance ministers meet in Copenhagen on Friday to plan a financial firewall to fend off the crisis threatening to engulf the southern European nations. |
| The EU's top economic official Olli Rehn is pushing to create a eurozone superfund by combining the €440bn EFSF, that had been due to be wound up next year, and the €500bn ESM. | The EU's top economic official Olli Rehn is pushing to create a eurozone superfund by combining the €440bn EFSF, that had been due to be wound up next year, and the €500bn ESM. |
| Last week, senior euro zone officials told Reuters that the 17-nation currency area is likely to agree on a combined fund of almost €700bn in a trade-off between German opposition to more funds and the need to reassure investors. | Last week, senior euro zone officials told Reuters that the 17-nation currency area is likely to agree on a combined fund of almost €700bn in a trade-off between German opposition to more funds and the need to reassure investors. |
| "The signals we are getting is that Germans are going to come on board," a diplomat told Reuters. | "The signals we are getting is that Germans are going to come on board," a diplomat told Reuters. |
| 10.39am: Here's some analysis just out on the Ifo German business climate data from Timo Klein, senior economist at IHS Global Insight. | 10.39am: Here's some analysis just out on the Ifo German business climate data from Timo Klein, senior economist at IHS Global Insight. |
| The overall index edged up from 109.7 to 109.8, a level last exceeded in July 2011. The sub-index reflecting six-month expectations also increased for the fifth month in succession, from 102.4 to 102.7, suggesting there is no "renewed setback in the pipeline", says Klein. | The overall index edged up from 109.7 to 109.8, a level last exceeded in July 2011. The sub-index reflecting six-month expectations also increased for the fifth month in succession, from 102.4 to 102.7, suggesting there is no "renewed setback in the pipeline", says Klein. |
| Although the current conditions sub-index stagnated at 117.4, thus failing to extend its February rebound, this remains far above its long-term average of 101.5. Klein writes: | Although the current conditions sub-index stagnated at 117.4, thus failing to extend its February rebound, this remains far above its long-term average of 101.5. Klein writes: |
| The breakdown by sector shows a mixed picture, with modest declines in the manufacturing, construction and wholesale sectors being fully offset by a large bounce of the recently lagging retail sector climate. In manufacturing, the dip was marginal and exclusively due to further light slippage of the assessment of current conditions, whereas 6-month expectations improved a touch. | The breakdown by sector shows a mixed picture, with modest declines in the manufacturing, construction and wholesale sectors being fully offset by a large bounce of the recently lagging retail sector climate. In manufacturing, the dip was marginal and exclusively due to further light slippage of the assessment of current conditions, whereas 6-month expectations improved a touch. |
| Expectations for exports also brightened up a little. The slight dip of the construction climate follows four consecutive months of sizeable increases and should be seen as a correction. Wholesaler climate remains in a moderate upward trend, amid some volatility. Finally, the retailer sub-index increased quite sharply to a level last seen in July 2011, driven by both expectations and current conditions. | Expectations for exports also brightened up a little. The slight dip of the construction climate follows four consecutive months of sizeable increases and should be seen as a correction. Wholesaler climate remains in a moderate upward trend, amid some volatility. Finally, the retailer sub-index increased quite sharply to a level last seen in July 2011, driven by both expectations and current conditions. |
| Overall, latest Ifo data provide reassuring evidence that the German economy will not be thrown off track again due to the recent rise in oil prices or lingering Eurozone debt crisis risks ... The IHS Global Insight March forecast looks for annual average growth to drop from 3.1% in 2011 to 0.7% in 2012 but pick up to 1.6% in 2013. | Overall, latest Ifo data provide reassuring evidence that the German economy will not be thrown off track again due to the recent rise in oil prices or lingering Eurozone debt crisis risks ... The IHS Global Insight March forecast looks for annual average growth to drop from 3.1% in 2011 to 0.7% in 2012 but pick up to 1.6% in 2013. |
| 10.27am: Helena Smith reports from Athens that the troika have returned to Greece with the aim of ensuring austerity measures are implemented no matter what the outcome of the forthcoming general election. She writes: | 10.27am: Helena Smith reports from Athens that the troika have returned to Greece with the aim of ensuring austerity measures are implemented no matter what the outcome of the forthcoming general election. She writes: |
| A technical team from the EU, ECB and IMF begins arriving in Athens today to ensure that whatever government emerges the measures are in place to enact €11.6bn in spending cuts between 2013 and 2014 to meet fiscal targets. | A technical team from the EU, ECB and IMF begins arriving in Athens today to ensure that whatever government emerges the measures are in place to enact €11.6bn in spending cuts between 2013 and 2014 to meet fiscal targets. |
| The newly installed finance minister, Filippos Sachinidis, has until this Friday to list state expenditure in all domains so that both sides can choose where to start cutting. | The newly installed finance minister, Filippos Sachinidis, has until this Friday to list state expenditure in all domains so that both sides can choose where to start cutting. |
| Economic stability in Greece will depend to great degree in the coming months on political developments, analysts say. The big question is when the national poll will take place. | Economic stability in Greece will depend to great degree in the coming months on political developments, analysts say. The big question is when the national poll will take place. |
| Well briefed sources said today that "it was most probable" the election will happen on May 6th, and not April 29th, simply because there was not enough time to enact the laws necessary to secure the second, €130bn rescue package of aid from the European Union and International Monetary Fund. "All the laws have to be passed before parliament is dissolved and everyone is coming round to the opinion that there is simply not enough time to do this," said one insider. "May 6th is now the most probable date and not April 29." | Well briefed sources said today that "it was most probable" the election will happen on May 6th, and not April 29th, simply because there was not enough time to enact the laws necessary to secure the second, €130bn rescue package of aid from the European Union and International Monetary Fund. "All the laws have to be passed before parliament is dissolved and everyone is coming round to the opinion that there is simply not enough time to do this," said one insider. "May 6th is now the most probable date and not April 29." |
| A raft of opinion surveys over the weekend reinforced what everyone fears: that Greece is heading for a hung parliament with no single party winning enough votes to form a government. | A raft of opinion surveys over the weekend reinforced what everyone fears: that Greece is heading for a hung parliament with no single party winning enough votes to form a government. |
| 10.19am:News in from Athens where our correspondent Helena Smith says officials, awaiting the return of international monitors, are heaving a sigh of relief that anti-austerity protestors failed to mar the country's independence day celebrations over the weekend. | 10.19am:News in from Athens where our correspondent Helena Smith says officials, awaiting the return of international monitors, are heaving a sigh of relief that anti-austerity protestors failed to mar the country's independence day celebrations over the weekend. |
| Helena writes: | Helena writes: |
| A massive security operation that it has emerged cost close to €1.5m ensured that Greece was able to mark its 191st year of freedom from Ottoman rule without incident – at least in Athens – over the weekend. | A massive security operation that it has emerged cost close to €1.5m ensured that Greece was able to mark its 191st year of freedom from Ottoman rule without incident – at least in Athens – over the weekend. |
| With Prime minister Lucas Papademos eager that parades be violence free, some 7000 police, including 40 units of riot police, were seconded to the capital for the event. | With Prime minister Lucas Papademos eager that parades be violence free, some 7000 police, including 40 units of riot police, were seconded to the capital for the event. |
| "The measures taken were close to extreme," a senior official admitted this morning. "And because of that nothing really happened in Athens." In other cities, violence did break out as Greeks enraged by spending cuts and tax increases scuffled with police and threw yoghurt, eggs and coffee at politicians. | "The measures taken were close to extreme," a senior official admitted this morning. "And because of that nothing really happened in Athens." In other cities, violence did break out as Greeks enraged by spending cuts and tax increases scuffled with police and threw yoghurt, eggs and coffee at politicians. |
| In Heraklion, the capital of Crete, clashes between hundreds of protestors and riot police ensured that the parade never took place. Similar clashes also broke out in the western port city of Patras and in Thessaloniki, the country's northern capital, where dozens of anti-austerity protestors were also arrested. | In Heraklion, the capital of Crete, clashes between hundreds of protestors and riot police ensured that the parade never took place. Similar clashes also broke out in the western port city of Patras and in Thessaloniki, the country's northern capital, where dozens of anti-austerity protestors were also arrested. |
| 10.09am: Russia is planning to issue dollar Eurobonds for the first time in two years, Reuters is reporting. | 10.09am: Russia is planning to issue dollar Eurobonds for the first time in two years, Reuters is reporting. |
| The bonds will be issued in 5, 10 and 30 year tranches, according to Reuters sources. Russian central bank and finance ministry officials are in London on a last leg of a Eurobond roadshow which ends on Tuesday, with pricing expected mid-week. | The bonds will be issued in 5, 10 and 30 year tranches, according to Reuters sources. Russian central bank and finance ministry officials are in London on a last leg of a Eurobond roadshow which ends on Tuesday, with pricing expected mid-week. |
| Russia hopes to raise $7bn abroad in 2012. The country last issued a dollar Eurobond in April 2010, raising $5.5bn. | Russia hopes to raise $7bn abroad in 2012. The country last issued a dollar Eurobond in April 2010, raising $5.5bn. |
| 9.53am: South Korea's $320bn (£201bn) pension fund is to set up a London base in a move that could boost investment in British infrastructure. | 9.53am: South Korea's $320bn (£201bn) pension fund is to set up a London base in a move that could boost investment in British infrastructure. |
| The South Korean National Pension Service, which has already invested more than £1bn in the UK with stakes in Gatwick Airport and HSBC's Canary Wharf headquarters, said Monday it would open its second foreign base after New York in the British capital. | The South Korean National Pension Service, which has already invested more than £1bn in the UK with stakes in Gatwick Airport and HSBC's Canary Wharf headquarters, said Monday it would open its second foreign base after New York in the British capital. |
| The news was announced by deputy prime minister Nick Clegg, who is visiting Seoul. The UK ratified a free trade agreement between the EU and South Korea on Sunday, saying it could add £500m a year to the UK economy and create £2bn of additional export opportunities. | The news was announced by deputy prime minister Nick Clegg, who is visiting Seoul. The UK ratified a free trade agreement between the EU and South Korea on Sunday, saying it could add £500m a year to the UK economy and create £2bn of additional export opportunities. |
| 9.28am: Italian consumers have a spring in their step, with national statistics bureau ISTAT saying confidence is at its highest since July. | 9.28am: Italian consumers have a spring in their step, with national statistics bureau ISTAT saying confidence is at its highest since July. |
| The consumer confidence index published Monday rose to 96.8 in March, up from 94.4 in February, beating the average forecast in a Reuters survey which had showed a slight decline to 93.7. | The consumer confidence index published Monday rose to 96.8 in March, up from 94.4 in February, beating the average forecast in a Reuters survey which had showed a slight decline to 93.7. |
| With the yield on 10 year bonds at under 5% and concern about a default abating, sentiment appears to be improving. | With the yield on 10 year bonds at under 5% and concern about a default abating, sentiment appears to be improving. |
| 9.06am: German business sentiment has risen for the fifth month in a row, according to data just published by the Ifo institute in Munich. | 9.06am: German business sentiment has risen for the fifth month in a row, according to data just published by the Ifo institute in Munich. |
| The Ifo business climate index rose to 109.8 in March, from a revised 109.7 in February. The uplift was a welcome surprise, as a Reuters poll of 51 economists had forecast March would be flat at 109.6. | The Ifo business climate index rose to 109.8 in March, from a revised 109.7 in February. The uplift was a welcome surprise, as a Reuters poll of 51 economists had forecast March would be flat at 109.6. |
| Nonetheless the German DAX headed into negative territory, down 0.41%, and the French CAC index of leading stocks fell 0.28%. Economist Carsten Brzeski at ING Bank comments: | Nonetheless the German DAX headed into negative territory, down 0.41%, and the French CAC index of leading stocks fell 0.28%. Economist Carsten Brzeski at ING Bank comments: |
| Today's Ifo index illustrates once again the sound economic fundamentals. The strong labour market, filled order books and low inventories still bode well for growth in the coming months, albeit at a low level. Even at a slower pace, the German economy should remain the Eurozone growth show case of this year. It might not be Champions League quality anymore, but with today's Ifo index it should probably be enough to win the Europa League. | Today's Ifo index illustrates once again the sound economic fundamentals. The strong labour market, filled order books and low inventories still bode well for growth in the coming months, albeit at a low level. Even at a slower pace, the German economy should remain the Eurozone growth show case of this year. It might not be Champions League quality anymore, but with today's Ifo index it should probably be enough to win the Europa League. |
| 8.56am: Olli Rehn, the European Union's economic chief, has called on the Spanish government to hold fast in pushing through austerity measures, blaming the recent sharp rise in Madrid borrowing costs on a view that spain was seeking to wriggle out of spending cuts. Rehn, the EU commissioner for economic and monetary affairs, told reporters on Saturday at an informal a gathering of European leaders in Finland: | 8.56am: Olli Rehn, the European Union's economic chief, has called on the Spanish government to hold fast in pushing through austerity measures, blaming the recent sharp rise in Madrid borrowing costs on a view that spain was seeking to wriggle out of spending cuts. Rehn, the EU commissioner for economic and monetary affairs, told reporters on Saturday at an informal a gathering of European leaders in Finland: |
| Because there was a perception Spain was relaxing its fiscal targets for this year, there has been already a market reaction of several dozen basis points on yields of Spanish bonds. .. That shows how fragile the situation still is. To return to sustainable growth, it is a necessary condition to ensure sustainability in public finances. | Because there was a perception Spain was relaxing its fiscal targets for this year, there has been already a market reaction of several dozen basis points on yields of Spanish bonds. .. That shows how fragile the situation still is. To return to sustainable growth, it is a necessary condition to ensure sustainability in public finances. |
| Spain's minister for European affairs, Inigo Mendez de Vigo, said Spain would not back away: | Spain's minister for European affairs, Inigo Mendez de Vigo, said Spain would not back away: |
| We're going to do it. We're on the way and we're serious. We're going to give our word. | We're going to do it. We're on the way and we're serious. We're going to give our word. |
| 8.31am: German Chancellor Angela Merkel has told the BBC that it would be "catastrophic" if Greece or any other euro country were to leave the currency union. | 8.31am: German Chancellor Angela Merkel has told the BBC that it would be "catastrophic" if Greece or any other euro country were to leave the currency union. |
| Following the €130bn rescue package recently agreed in order to keep Greece solvent until 2014, Merkel said the eurozone would be "incredibly weakend" by a Greek exit. | Following the €130bn rescue package recently agreed in order to keep Greece solvent until 2014, Merkel said the eurozone would be "incredibly weakend" by a Greek exit. |
| In an interview to be broadcast on Newsnight on Monday, she said: | In an interview to be broadcast on Newsnight on Monday, she said: |
| People all over the world would ask: 'Who will be next?'...We have taken the decision to be in a currency union. This is not only a monetary decision, it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us: 'We no longer want you' | People all over the world would ask: 'Who will be next?'...We have taken the decision to be in a currency union. This is not only a monetary decision, it is a political one. It would be catastrophic if we were to say to one of those who have decided to be with us: 'We no longer want you' |
| Merkel backed UK chancellor George Osborne's austerity drive, saying the country "was right" to cut public spending. | Merkel backed UK chancellor George Osborne's austerity drive, saying the country "was right" to cut public spending. |
| It is something that each country in Europe can do because we will all learn that no country can live beyond its means | It is something that each country in Europe can do because we will all learn that no country can live beyond its means |
| 8.25am: European markets are rallying this morning after last week's falls: | 8.25am: European markets are rallying this morning after last week's falls: |
| The FTSE 100 is up with a 0.21% rise The French CAC is trading 0.43% higher The German Dax is up 0.37% | The FTSE 100 is up with a 0.21% rise The French CAC is trading 0.43% higher The German Dax is up 0.37% |
| 8.16am: Here's today's agenda: | 8.16am: Here's today's agenda: |
| • German business climate indicator: the IFO publishes data for March 9.30am • Office for Budget Responsibility: The OBR will give evidence to the Treasury committee's 2012 Budget inquiry at 3.30pm • Mario Draghi to speak: the European Central Bank president will address a German banking event 4pm | • German business climate indicator: the IFO publishes data for March 9.30am • Office for Budget Responsibility: The OBR will give evidence to the Treasury committee's 2012 Budget inquiry at 3.30pm • Mario Draghi to speak: the European Central Bank president will address a German banking event 4pm |
| 7.45am: Good morning and welcome to the eurozone crisis live blog. | 7.45am: Good morning and welcome to the eurozone crisis live blog. |
| The pain in Spain will move centre stage this week, with prime minister Mariano Rajoy due to announce €40bn of spending cuts in a budget on Friday. | The pain in Spain will move centre stage this week, with prime minister Mariano Rajoy due to announce €40bn of spending cuts in a budget on Friday. |
| This will follow a general strike planned for Thursday, the first in Spain since September 2010, as public sector workers demonstrate against austerity and unemployment. | This will follow a general strike planned for Thursday, the first in Spain since September 2010, as public sector workers demonstrate against austerity and unemployment. |
| As my colleague Giles Tremlett in Madrid writes in today's Guardian: | As my colleague Giles Tremlett in Madrid writes in today's Guardian: |
| European leaders and bond markets, which now consider Spain a worse risk than Italy, are beginning to see the country as the biggest single threat to teh eurozone. | European leaders and bond markets, which now consider Spain a worse risk than Italy, are beginning to see the country as the biggest single threat to teh eurozone. |
| Rajoy, just three months in office, failed to lead his conservative Peoples Party to a decisive victory in southern Andalucia and northern Asturias in regional elections on Sunday, as worries loom over Spain's regional governments' ability to control their deficits. | Rajoy, just three months in office, failed to lead his conservative Peoples Party to a decisive victory in southern Andalucia and northern Asturias in regional elections on Sunday, as worries loom over Spain's regional governments' ability to control their deficits. |
| After a quiet spell following the Greek debt settlement, negative economic data from France and Germany last week saw equity markets suffer their worst five days of 2012. | After a quiet spell following the Greek debt settlement, negative economic data from France and Germany last week saw equity markets suffer their worst five days of 2012. |
| Eurogroup finance ministers meet in Copenhagen on Friday and Saturday, with Germany expected to drop its opposition to combining the remainder of the EFSF (European Financial Stability Facility) with the European Stability Mechanism (ESM) to create a €740bn (£618bn) pot. | Eurogroup finance ministers meet in Copenhagen on Friday and Saturday, with Germany expected to drop its opposition to combining the remainder of the EFSF (European Financial Stability Facility) with the European Stability Mechanism (ESM) to create a €740bn (£618bn) pot. |
| Today's German IFO data for March will set the tone after last week's worrying PMI numbers. | Today's German IFO data for March will set the tone after last week's worrying PMI numbers. |