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Eurozone crisis live: Greek talks continue as eurozone dodges recession Eurozone crisis live: Greek talks continue as eurozone dodges recession
(40 minutes later)
10.53am: Spain (anothe country in recession) is increasingly sending out SOS messages to its eurozone partners.
My colleague Giles Tremlett reports from Madrid:
Finance minister Luis de Guindos has today suggested the European Central Bank should help with the two valuations of total bank assets that Spain's government is to commission from independent valuers. Fellow eurozone ministers are pressing for Spain to complete the valuations quickly, but the task is huge. De Guindos says they will try to get it done in two months.
Spain's conservative People's party government, ideologically aligned with Angela Merkel, went into the eurogroup meeting claiming it is doing all it can to sort out banks and deficit-spending, while pushing ahead with key labour market and budget reforms.
If that is not enough to stop bond yields soaring (and yesterday they reached their highest level since the nerve-shattering month of November, with the interest on ten year bonds closing at over 6.2 percent), then the eurozone must react as a whole, De Guindos said. "What we need now is cooperation from the eurozone and a joint reply," (to market pressures) he said.
10.41am: A quick shout-out for my colleague Andrew Sparrow, who will soon be interviewing Robert Chote, head of the Office for Budget Responsibility. Chote is the man who scrutinises the UK budgets to ensure they are based credible economic foreacsts -- effectively he's Britain's budget regulator. We'd love to hear your questions for Chote -- so if you've got one, please post it over here.
10.31am: Here's a round-up of reaction ot the surprising news that the eurozone is not in recession:
Mads Koefoed of Saxobank
Germany is leading the bloc, but this doesn't mean we will have a strong rebound, austerity is not going away and southern European economies are really struggling.
We are looking at stagnation to very mild growth in the year to come.
Howard Archer of IHS Global Insight
The Eurozone has struggled for any growth at all since the first quarter of 2011.
While it is welcome news that the Eurozone avoided recession, its performance is hardly something to celebrate as GDP was only flat year-on-year in the first quarter of 2012. Furthermore, generally weaker latest data and, particularly, survey evidence suggests that renewed GDP contraction is very much on the menu for the second quarter.
Jennifer McKeown of Capital Markets
The region remains heavily reliant on Germany, where activity rose by a better-than-expected 0.5 percent, thanks mainly to strong net trade.
Looking ahead, the situation will only get worse as the periphery remains mired in recession and German exports falter.
Ranvir Singh, chief executive of RANsquawk
At the top of the pile are the Germans, quietly assured of the power and reliability of their export-driven economy.
In the middle sits France, which is heading the other way but has so far just teetered on the edge of recession. Modest growth at the end of 2011 turned slipped into stagnation in the first three months of this year.
[But]With recessions battering Spain, Greece and Portugal, the Eurozone as a whole was pegged back to stagnation in the first quarter of 2012.
10.19am: Portugal's economy has also continued to shrink, but at a slower rate.
The third member of the eurozone to seek a bailout saw its GDP fall by 0.1% in the first three months of 2012, a much shallower decline than the 1.3% slump seen in Q4 2011.
10.12am: New GDP data from Greece was also just released, and shows that its long, deep recession continued.
On a year-on-year basis, Greek GDP fell by 6.2% in the first three months of 2012.
That's a year-on-year figure, rather than the quarter-on-quarter data reported by other countries this morning. But it's still indicates a savage fall in activity. Economists have calculated that the Greek economy will have shrunk by 20% between 2008 and 2012.
10.00am: Breaking news - the eurozone has avoided recession, with GDP remaining flat in the first three months of 2012.10.00am: Breaking news - the eurozone has avoided recession, with GDP remaining flat in the first three months of 2012.
Data just released showed that the economic growth across the 17-member single currency union was flat, defying economist predictions of a 0.2% contraction (following the 0.3% decline reported in the previous quarter). Data just released showed that the economic growth across the 17-member single currency union was 0%, defying economist predictions of a 0.2% contraction (following the 0.3% decline reported in the previous quarter).
It appears that strong growth in Germany dragged the eurozone away from a second quarterly contraction, with German GDP up by 0.5% (while Italy suffered a 0.8% decline). It appears that strong growth in Germany dragged the eurozone away from a second quarterly contraction, with German GDP up by 0.5% (while Italy suffered a 0.8% decline).
On a year-on-year basis, the eurozone economy also posted flat growth.On a year-on-year basis, the eurozone economy also posted flat growth.
We shouldn't get carried away - stagnation will not solve the eurozone's economic problems. But it's still a small relief.We shouldn't get carried away - stagnation will not solve the eurozone's economic problems. But it's still a small relief.
9.45am: Today's talks over the formation of a 'technocratic government' in Greece appear doomed to fail, even before they begin.9.45am: Today's talks over the formation of a 'technocratic government' in Greece appear doomed to fail, even before they begin.
From Athens, our correspondent Helena Smith reports that Greece's feuding party chiefs are trading blows, in a sign that the political paralysis is not easing. Helena writes:From Athens, our correspondent Helena Smith reports that Greece's feuding party chiefs are trading blows, in a sign that the political paralysis is not easing. Helena writes:
In a new twist to the escalating drama engulfing Athens, political party leaders are back at it again: firing salvos of venom at each other and, above all, pouring cold water on the latest possible exit route out of the crisis by forming a government of "personalities."In a new twist to the escalating drama engulfing Athens, political party leaders are back at it again: firing salvos of venom at each other and, above all, pouring cold water on the latest possible exit route out of the crisis by forming a government of "personalities."
The technocrat solution was tountamount to "the defeat of politics," said Fotis Kouvellis who heads the small Democrat Left party.The technocrat solution was tountamount to "the defeat of politics," said Fotis Kouvellis who heads the small Democrat Left party.
"I told the President ... that a government formed by technocrats and personalities means the defeat of politics. I expressed that I am against it.""I told the President ... that a government formed by technocrats and personalities means the defeat of politics. I expressed that I am against it."
Greece's head of state Carolos Papoulias was reported this morning as telling leaders that their differences where "insignificant" compared with their "duty towards the country."Greece's head of state Carolos Papoulias was reported this morning as telling leaders that their differences where "insignificant" compared with their "duty towards the country."
The president, who proposed that personalities man a new government in what is being seen as the VERY LAST attempt to plug Greece's power vacuum, meets political leaders at 2 PM local time (noon GMT). With the exception of Aleka Papariga, the communist party chief and Nikos Michaloliakos, who heads the neo-fascist Chyrsi Avgi party, the heads of every single party catapulted into parliament in the inconclusive May 6 elections will be there including Left Coalition leader Alexis Tsipras who refused to attend yesterday's talks.The president, who proposed that personalities man a new government in what is being seen as the VERY LAST attempt to plug Greece's power vacuum, meets political leaders at 2 PM local time (noon GMT). With the exception of Aleka Papariga, the communist party chief and Nikos Michaloliakos, who heads the neo-fascist Chyrsi Avgi party, the heads of every single party catapulted into parliament in the inconclusive May 6 elections will be there including Left Coalition leader Alexis Tsipras who refused to attend yesterday's talks.
But the president's pleas appear to have had no impact.But the president's pleas appear to have had no impact.
Hopes of a solution being reached with the help of Panos Kammenos, a former conservative MP who now heads the vehemently anti-austerity breakaway Independent Greeks party were also dashed today. With 33 seats in the 300-member parliament, Kammenos, in effect, could have held the key to a solution. Cooperation with the centre right New Democracy and centre left Socialist Pasok would have given the new 'national unity' government a comfortable 182 seats in the House.Hopes of a solution being reached with the help of Panos Kammenos, a former conservative MP who now heads the vehemently anti-austerity breakaway Independent Greeks party were also dashed today. With 33 seats in the 300-member parliament, Kammenos, in effect, could have held the key to a solution. Cooperation with the centre right New Democracy and centre left Socialist Pasok would have given the new 'national unity' government a comfortable 182 seats in the House.
But this morning Kammenos, a blustering right-wing populist, said he would not attend a separate one-hour meeting with Papoulias prior to the talks following the "provocative" distribution of a highly sensitive document attributed to his party. The paper, which had been circulated by the presidential office to party leaders, said Independent Greeks would support a unity government if it were a matter of "national urgency." Independent Greeks, which has described the EU-IMF imposed austerity and structural reform program as a form of "foreign occupation" reportedly also said it would accept to participate in such a coalition if given the portfolio of the defense ministry.But this morning Kammenos, a blustering right-wing populist, said he would not attend a separate one-hour meeting with Papoulias prior to the talks following the "provocative" distribution of a highly sensitive document attributed to his party. The paper, which had been circulated by the presidential office to party leaders, said Independent Greeks would support a unity government if it were a matter of "national urgency." Independent Greeks, which has described the EU-IMF imposed austerity and structural reform program as a form of "foreign occupation" reportedly also said it would accept to participate in such a coalition if given the portfolio of the defense ministry.
Speaking to Skai radio this morning, Kammenos said: "This document is not mine, it has never been submitted by Independent Greeks, it is not stamped, nor does it have a protocol number. I did not give it to the president.Speaking to Skai radio this morning, Kammenos said: "This document is not mine, it has never been submitted by Independent Greeks, it is not stamped, nor does it have a protocol number. I did not give it to the president.
With Greece's euro zone member ship on the line and the stakes so high, the infighting has left many aghast. "I really don't see how there is any way out apart from going to fresh elections," Nikos Evangelatos, a veteran observer of the political scene, told a local radio station. "At least elections will give everyone [the parties] the chance to air their views."With Greece's euro zone member ship on the line and the stakes so high, the infighting has left many aghast. "I really don't see how there is any way out apart from going to fresh elections," Nikos Evangelatos, a veteran observer of the political scene, told a local radio station. "At least elections will give everyone [the parties] the chance to air their views."
Many Greek citizens sound weary of the ongoing saga, with Diane Shugart questioning the its democratic legitimacy on Twitter:Many Greek citizens sound weary of the ongoing saga, with Diane Shugart questioning the its democratic legitimacy on Twitter:
good morning from the cradle of democracy--government by the people appointed by a few people for the peoplegood morning from the cradle of democracy--government by the people appointed by a few people for the people
— Diane Shugart (@dianalizia) May 15, 2012— Diane Shugart (@dianalizia) May 15, 2012
9.12am: There's quite a lot of interest this morning in comments made last night by Jean-Claude Juncker, the chairman of the eurogroup of finance ministers.9.12am: There's quite a lot of interest this morning in comments made last night by Jean-Claude Juncker, the chairman of the eurogroup of finance ministers.
Asked whether the eurogroup has considered the chances of Greece exiting the euro at yesterday's talks, Juncker responded that such talk was "propaganda and nonsense".Asked whether the eurogroup has considered the chances of Greece exiting the euro at yesterday's talks, Juncker responded that such talk was "propaganda and nonsense".
Juncker continued:Juncker continued:

The exit of Greece out of the euro was not the subject of our debate today. Absolutely no one, absolutely no one, argued in that sense....
The exit of Greece out of the euro was not the subject of our debate today. Absolutely no one, absolutely no one, argued in that sense....
But the Greek public, the Greek citizens, have to know that we agreed on a programme and this programme has to be implemented.But the Greek public, the Greek citizens, have to know that we agreed on a programme and this programme has to be implemented.
Hmmm. If Juncker is being completely honest, that's actually rather worrying. The idea of Greece leaving the euro isn't just a media contruct -- many economist believe it may be inevitable.Hmmm. If Juncker is being completely honest, that's actually rather worrying. The idea of Greece leaving the euro isn't just a media contruct -- many economist believe it may be inevitable.
However, Juncker's comments have been well-received in Athens, our Greece correspondent Helena Smith informs me:However, Juncker's comments have been well-received in Athens, our Greece correspondent Helena Smith informs me:
Radio stations commentators have been quoting Juncker as saying: "I don't envisage, not even for one second, Greece leaving. " Many have sounded "quite relieved."Radio stations commentators have been quoting Juncker as saying: "I don't envisage, not even for one second, Greece leaving. " Many have sounded "quite relieved."
9.00am: Italy's recession is getting worse -- with news breaking that GDP shrank by 0.8% in the first quarter of 2012.9.00am: Italy's recession is getting worse -- with news breaking that GDP shrank by 0.8% in the first quarter of 2012.
That's worse than expected, and much worse than other data this morning (such as Germany's 0.5% expansion and France's flat performance). Italy has now been shrinking for the past nine months.That's worse than expected, and much worse than other data this morning (such as Germany's 0.5% expansion and France's flat performance). Italy has now been shrinking for the past nine months.
The biggest drop in quarterly GDP in three years comes just hours after rating agency Moody's downgraded 26 Italian banks.The biggest drop in quarterly GDP in three years comes just hours after rating agency Moody's downgraded 26 Italian banks.
8.58am: Over in Greece, reports are coming in that the Athens government will repay a €450m bond which matures today. There had been speculation that the country might have withheld the money, which is due to investors who refused to take part in this year's debt swap, which would have added another level of uncertainty to the crisis.8.58am: Over in Greece, reports are coming in that the Athens government will repay a €450m bond which matures today. There had been speculation that the country might have withheld the money, which is due to investors who refused to take part in this year's debt swap, which would have added another level of uncertainty to the crisis.
8.44am: The recession in the Netherlands has continued, with data just released showing that the Dutch economy shrank by 0.2% in the first three months of 2012.8.44am: The recession in the Netherlands has continued, with data just released showing that the Dutch economy shrank by 0.2% in the first three months of 2012.
That's the third quarterly contraction in a row, at a time when the Netherlands faces political uncertainty following the collapse of its government last month.That's the third quarterly contraction in a row, at a time when the Netherlands faces political uncertainty following the collapse of its government last month.
And outside the eurozone, Hungary has suffered its first fall in GDP since 2009, with a 0.7% drop in output in Q1 2012.And outside the eurozone, Hungary has suffered its first fall in GDP since 2009, with a 0.7% drop in output in Q1 2012.
Other data has been more optimistic this morning, with Austria growing by 0.2% in the first three months of 2012.Other data has been more optimistic this morning, with Austria growing by 0.2% in the first three months of 2012.
8.22am: European stock markets have recovered in early trading, thanks to the better-than-expected economic data from Germany this morning (see 7.52am).8.22am: European stock markets have recovered in early trading, thanks to the better-than-expected economic data from Germany this morning (see 7.52am).
FTSE 100: up 27 points, or 0.4%, at 5487
German DAX: up 45 points, or 0.7%, at 6497
French CAC: up 26 points, or 0.8%, at 3084
Spanish IBEX: up 41 points, or 0.6%, at 6852
Italilan FTSE MIB: up 88 points, or 0.6%, at 13744.		FTSE 100: up 27 points, or 0.4%, at 5487
German DAX: up 45 points, or 0.7%, at 6497
French CAC: up 26 points, or 0.8%, at 3084
Spanish IBEX: up 41 points, or 0.6%, at 6852
Italilan FTSE MIB: up 88 points, or 0.6%, at 13744.
8.12am: This morning's GDP data from France and Germany adds another twist to Angela Merkel and François Hollande's meeting today. A stagnating French economy could reinforce Hollande's case for a new growth pact, while Merkel's domestic audience may feel that their economy is performing quite well as things stand.8.12am: This morning's GDP data from France and Germany adds another twist to Angela Merkel and François Hollande's meeting today. A stagnating French economy could reinforce Hollande's case for a new growth pact, while Merkel's domestic audience may feel that their economy is performing quite well as things stand.
Our Europe editor Ian Traynor has predicted that Hollande faces a baptism of fire when he arrives in Germany fresh from his inauguration:Our Europe editor Ian Traynor has predicted that Hollande faces a baptism of fire when he arrives in Germany fresh from his inauguration:
If the Frenchman has the advantage of freshness to the German's slightly jaded air, the underlying reality is of German strength and relative French weakness. The crisis of the past two years has laid bare the myth that the traditional Franco-German relationship at the EU's core is a partnership of equals.If the Frenchman has the advantage of freshness to the German's slightly jaded air, the underlying reality is of German strength and relative French weakness. The crisis of the past two years has laid bare the myth that the traditional Franco-German relationship at the EU's core is a partnership of equals.
"France has much less clout in the EU than Germany. The financial crisis and the euro crisis have highlighted the vulnerabilities of the French economy: its waning competitiveness," wrote Charles Grant, director of the Centre for European Reform."France has much less clout in the EU than Germany. The financial crisis and the euro crisis have highlighted the vulnerabilities of the French economy: its waning competitiveness," wrote Charles Grant, director of the Centre for European Reform.
Merkel may be weakened at home as a result of the North-Rhine Westphalia defeat and increasingly isolated internationally for her euro policies which are also under fire from Washington and the International Monetary Fund.Merkel may be weakened at home as a result of the North-Rhine Westphalia defeat and increasingly isolated internationally for her euro policies which are also under fire from Washington and the International Monetary Fund.
But she remains personally popular in Germany and by far the most powerful EU leader. She has no intention of reopening her eurozone fiscal pact, which Hollande has consistently criticised. But the new French leader also looks likely to make a difference.But she remains personally popular in Germany and by far the most powerful EU leader. She has no intention of reopening her eurozone fiscal pact, which Hollande has consistently criticised. But the new French leader also looks likely to make a difference.
After years of Merkel and Sarkozy cutting deals in private and then presenting faits accomplis to the rest of Europe, Hollande will be less open to doing Berlin's bidding.After years of Merkel and Sarkozy cutting deals in private and then presenting faits accomplis to the rest of Europe, Hollande will be less open to doing Berlin's bidding.
7.52am: Germany's economy roared back to growth in the first three months of 2012, according to data released this morning.7.52am: Germany's economy roared back to growth in the first three months of 2012, according to data released this morning.
Germany GDP increased by 0.5% between January and March, recovering from the 0.2% contraction in the final three months of 2011. Much better than the 0.1% expansion pencilled in by City economists.Germany GDP increased by 0.5% between January and March, recovering from the 0.2% contraction in the final three months of 2011. Much better than the 0.1% expansion pencilled in by City economists.
Net exports were the main driver of growth quarter-to-quarter, another indication that Germany has not been badly hit by the eurozone crisis.Net exports were the main driver of growth quarter-to-quarter, another indication that Germany has not been badly hit by the eurozone crisis.
So, no double-dip in Europe's powerhouse economy. But also a sign that the eurozone's two-speed economy may be getting worse (data released last month showed that Spain is in recession, and more data will be released this morning).So, no double-dip in Europe's powerhouse economy. But also a sign that the eurozone's two-speed economy may be getting worse (data released last month showed that Spain is in recession, and more data will be released this morning).
Jeremy Cook, chief economist at World First, argues that the data shows the impossibility of setting monetary policy across such divergent economies:Jeremy Cook, chief economist at World First, argues that the data shows the impossibility of setting monetary policy across such divergent economies:
German GDP of 0.5% further emphasises the fact that a strong Europe is impossible with a strong GermanyGerman GDP of 0.5% further emphasises the fact that a strong Europe is impossible with a strong Germany
— World First (@World_First) May 15, 2012— World First (@World_First) May 15, 2012
7.42am: The news that the French economy stagnated in the first three months of 2012 underlines the challenge faced by new president François Hollande.7.42am: The news that the French economy stagnated in the first three months of 2012 underlines the challenge faced by new president François Hollande.
Paris-based national statistics office Insee reported this morning that French GDP was unchanged compared with the fourth quarter (when it expanded by a meagre 0.1%).Paris-based national statistics office Insee reported this morning that French GDP was unchanged compared with the fourth quarter (when it expanded by a meagre 0.1%).
Hollande could take comfort in the fact that the French economy isn't actually suffering an Anglo-Saxon double-dip recession. But looking into the figures, it was flattered by an increase in government spending, while business investment fell by 0.7% (which could hit growth down the line).Hollande could take comfort in the fact that the French economy isn't actually suffering an Anglo-Saxon double-dip recession. But looking into the figures, it was flattered by an increase in government spending, while business investment fell by 0.7% (which could hit growth down the line).
Economists warn that the French economy is on a slippery path, making it hard for Hollande to reduce the deficit without crushing growth. As Societe Generale economist Michel Martinez put it (via Bloomberg):Economists warn that the French economy is on a slippery path, making it hard for Hollande to reduce the deficit without crushing growth. As Societe Generale economist Michel Martinez put it (via Bloomberg):
The new government faces a high-wire act.The new government faces a high-wire act.
A hardening budget stance will only make things more difficult in the months ahead....Too heavy tax increases could cause growth to falter.A hardening budget stance will only make things more difficult in the months ahead....Too heavy tax increases could cause growth to falter.
7.40am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis.7.40am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis.
Coming up.... in Greece, another round of last-ditch, make-or-break talks will take place in Athens today, nine days after the general election. President Karolos Papoulias will propose setting up a 'government of technocrats', after the leaders of the main political parties failed to form a coalition.Coming up.... in Greece, another round of last-ditch, make-or-break talks will take place in Athens today, nine days after the general election. President Karolos Papoulias will propose setting up a 'government of technocrats', after the leaders of the main political parties failed to form a coalition.
The Greek crisis will also dominate a meeting of EU finance ministers in Brussels today. After Monday's heavy falls on world stock markets, leaders are under relentless pressure to solve the crisis.The Greek crisis will also dominate a meeting of EU finance ministers in Brussels today. After Monday's heavy falls on world stock markets, leaders are under relentless pressure to solve the crisis.
Economically it's a big day, with eurozone GDP for Q1 2012 being released. We've already had data from France (which stagnated with 0% change to GDP), and Germany (which smashed forecasts with a 0.5% rise). More on these shortly.....Economically it's a big day, with eurozone GDP for Q1 2012 being released. We've already had data from France (which stagnated with 0% change to GDP), and Germany (which smashed forecasts with a 0.5% rise). More on these shortly.....
And on the political front, François Hollande is being sworn in as France's new president, and will immediately fly to Germany to meet with Angela Merkel to discuss the crisis.And on the political front, François Hollande is being sworn in as France's new president, and will immediately fly to Germany to meet with Angela Merkel to discuss the crisis.