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| Greek debt crisis enters crucial 48 hours as optimism over bailout rises | Greek debt crisis enters crucial 48 hours as optimism over bailout rises |
| (about 2 hours later) | |
| Eurozone experts are meeting on Tuesday to hammer out a plan to keep Greece in the eurozone as emergency talks enter a critical 48 hours. | Eurozone experts are meeting on Tuesday to hammer out a plan to keep Greece in the eurozone as emergency talks enter a critical 48 hours. |
| An intense day of back-to-back meetings between Greece and its creditors ended on Monday without a definitive deal, although senior eurozone leaders insisted they were closer to breaking five months of stalemate over the Greek bailout. | An intense day of back-to-back meetings between Greece and its creditors ended on Monday without a definitive deal, although senior eurozone leaders insisted they were closer to breaking five months of stalemate over the Greek bailout. |
| Related: Greek crisis: Athens and creditors race to reach deal this week - live updates | |
| Jean-Claude Juncker, the president of the European commission, described an 11th-hour compromise proposal from the Greek government as a “major step” that would yield an agreement in the coming days. | Jean-Claude Juncker, the president of the European commission, described an 11th-hour compromise proposal from the Greek government as a “major step” that would yield an agreement in the coming days. |
| “I am convinced that we will come up with a final agreement in the course of the week for the simple reason that we have to find an agreement this week,” he said. | “I am convinced that we will come up with a final agreement in the course of the week for the simple reason that we have to find an agreement this week,” he said. |
| As negotiators got down to work on Tuesday, Reuters reported that the European Central Bank agreed to inject nearly €1bn into the Greek banking system, the third consecutive (working) day Greece has been allowed emergency liquidity to stave off bankruptcy. | As negotiators got down to work on Tuesday, Reuters reported that the European Central Bank agreed to inject nearly €1bn into the Greek banking system, the third consecutive (working) day Greece has been allowed emergency liquidity to stave off bankruptcy. |
| Greece and its creditors have just days to reach an agreement that will unlock bailout funds ahead of a crunch deadline on Tuesday 30 June when Greece is due to repay €1.6bn (£1.14bn) to the International Monetary Fund. Default could trigger a chaotic exit from the eurozone that both Greece and his creditors insist they are anxious to avoid. | Greece and its creditors have just days to reach an agreement that will unlock bailout funds ahead of a crunch deadline on Tuesday 30 June when Greece is due to repay €1.6bn (£1.14bn) to the International Monetary Fund. Default could trigger a chaotic exit from the eurozone that both Greece and his creditors insist they are anxious to avoid. |
| Related: Hopes for Greece bailout deal rise sharply as Athens gives ground | |
| One of the most pressing questions is whether a deal between Greece and its creditors would clear the Greek parliament in time for next Tuesday’s deadline. | One of the most pressing questions is whether a deal between Greece and its creditors would clear the Greek parliament in time for next Tuesday’s deadline. |
| Technical experts are preparing the ground ahead of a further meeting of eurozone finance ministers on Wednesday evening. This Eurogroup meeting – the third in less than a week – will be followed by a long-scheduled summit of all 28 European Union leaders where a final deal could be approved. | Technical experts are preparing the ground ahead of a further meeting of eurozone finance ministers on Wednesday evening. This Eurogroup meeting – the third in less than a week – will be followed by a long-scheduled summit of all 28 European Union leaders where a final deal could be approved. |
| The German chancellor, Angela Merkel, said she hoped EU leaders meeting on Thursday would only have to “take note” of the Eurogroup agreement with Greece. She has been reluctant to add the Greek crisis to the packed agenda of the summit, which includes the humanitarian migrant crisis at Europe’s borders and the UK’s demands for EU reform. | The German chancellor, Angela Merkel, said she hoped EU leaders meeting on Thursday would only have to “take note” of the Eurogroup agreement with Greece. She has been reluctant to add the Greek crisis to the packed agenda of the summit, which includes the humanitarian migrant crisis at Europe’s borders and the UK’s demands for EU reform. |
| Renewed optimism among investors that Greece would avoid a chaotic default boosted stock markets on Tuesday. Greece’s main index rose nearly 5%, while the French and German exchanges gained over 1%. In London the FTSE 100 saw a more modest 0.25% rise, while Japan’s Nikkei index hit a 15-year high. | |
| The mood was also lifted by unexpectedly positive data showing that eurozone factories and service industries were growing faster than many economists had thought. The Markit eurozone index rose to 54.1 in May, up from 53.6 the previous month, on a scale when anything over 50 signals expansion. Chris Williamson, chief economist at Markit, said the eurozone economies were weathering the stalemate over Greece relatively well. | |
| Some analysts, however, worried that investors were getting carried away. “Yesterday’s euphoric market reaction to the proposed new Greece debt deal seems somewhat of an overreaction to an event that on the face it will do little to resolve Greece’s long-term problems, and while as yet nothing has actually been agreed,” said Michael Hewson, chief market analyst at CMC Markets. | Some analysts, however, worried that investors were getting carried away. “Yesterday’s euphoric market reaction to the proposed new Greece debt deal seems somewhat of an overreaction to an event that on the face it will do little to resolve Greece’s long-term problems, and while as yet nothing has actually been agreed,” said Michael Hewson, chief market analyst at CMC Markets. |
| On Monday night, Donald Tusk, the president of the European Council, called for all sides to take responsibility to prevent an “uncontrollable chaotic Graccident”. | On Monday night, Donald Tusk, the president of the European Council, called for all sides to take responsibility to prevent an “uncontrollable chaotic Graccident”. |
| The lefist Greek government, which swept to power in January on a promise to end austerity, has made a series of concessions to its eurozone creditors. | The lefist Greek government, which swept to power in January on a promise to end austerity, has made a series of concessions to its eurozone creditors. |
| Under the proposals, billed by Tsipras as “absolute and complete”, Greece would increase VAT and reform its pension system in order to eventually raise the retirement age to 67. Other proposals include a special tax on companies earning more than €500,000 and an increase in the luxury tax that would hit owners of private yachts. | Under the proposals, billed by Tsipras as “absolute and complete”, Greece would increase VAT and reform its pension system in order to eventually raise the retirement age to 67. Other proposals include a special tax on companies earning more than €500,000 and an increase in the luxury tax that would hit owners of private yachts. |
| Tusk said the latest plan from Athens represented “the first real proposals for many weeks”, while officials were briefing that Greece was 90% of the way to agreement. | Tusk said the latest plan from Athens represented “the first real proposals for many weeks”, while officials were briefing that Greece was 90% of the way to agreement. |
| But sticking points remain. The creditor side will put pressure on Greece to come up with further reforms to its VAT system and tear down protectionist barriers that it says artificially inflate prices for hundreds of products from food to medicines. | But sticking points remain. The creditor side will put pressure on Greece to come up with further reforms to its VAT system and tear down protectionist barriers that it says artificially inflate prices for hundreds of products from food to medicines. |
| But one leading figure in Syriza said the package would never pass the Greek parliament. Alexis Mitropoulos, vicepresident of the 300-seat house, told Star TV last night that the Tsipras proposals were “extreme and anti-social” and “cannot come to the Greek parliament”. | But one leading figure in Syriza said the package would never pass the Greek parliament. Alexis Mitropoulos, vicepresident of the 300-seat house, told Star TV last night that the Tsipras proposals were “extreme and anti-social” and “cannot come to the Greek parliament”. |
| While Donald Tusk, president of the European council, insisted that eurozone countries were “all on the same page”, some leaders showed no sign of toning down the rhetoric. | While Donald Tusk, president of the European council, insisted that eurozone countries were “all on the same page”, some leaders showed no sign of toning down the rhetoric. |
| Dalia Grybauskaitė, the president of Lithuania, which pushed through deep spending cuts at the height of the financial crisis, said the Greeks did not appreciate the seriousness of the situation. The Greeks had not yet come up with a proposal that impressed her, she said, although she added that an agreement was necessary. | Dalia Grybauskaitė, the president of Lithuania, which pushed through deep spending cuts at the height of the financial crisis, said the Greeks did not appreciate the seriousness of the situation. The Greeks had not yet come up with a proposal that impressed her, she said, although she added that an agreement was necessary. |
| Jeroen Dijsselbloem, the Dutch finance minister, who chairs the group of 19 eurozone countries, said the institutions leading the Greek bailout – the European commission, the European Central Bank and the International Monetary Fund – needed time to look at the Greek proposals with the aim of reaching an agreement later this week. | Jeroen Dijsselbloem, the Dutch finance minister, who chairs the group of 19 eurozone countries, said the institutions leading the Greek bailout – the European commission, the European Central Bank and the International Monetary Fund – needed time to look at the Greek proposals with the aim of reaching an agreement later this week. |
| He said the Greek plan was “a basis to really restart the talks again and really get a result”, although officials needed to assess whether “the economic reforms [proposed] are enough for the economy to take off again”. | He said the Greek plan was “a basis to really restart the talks again and really get a result”, although officials needed to assess whether “the economic reforms [proposed] are enough for the economy to take off again”. |
| Meanwhile the Greek financial system remains on life-support, as nervous depositors continue to take their money out of Greek banks. The €1bn emergency liquidity made available to Greek banks on Tuesday takes the total financial aid package from the ECB to €89bn. | Meanwhile the Greek financial system remains on life-support, as nervous depositors continue to take their money out of Greek banks. The €1bn emergency liquidity made available to Greek banks on Tuesday takes the total financial aid package from the ECB to €89bn. |
| A senior official on the ECB’s governing council hinted on Monday that Greece could lose that support without a political agreement. Juncker said last night that capital controls were not discussed at the emergency euro summit. | A senior official on the ECB’s governing council hinted on Monday that Greece could lose that support without a political agreement. Juncker said last night that capital controls were not discussed at the emergency euro summit. |