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The Eurogroup meeting - the key weekend for Greece The Eurogroup meeting - the key weekend for Greece
(35 minutes later)
What is Saturday’s meeting?What is Saturday’s meeting?
Eurozone finance ministers, known as the Eurogroup, are holding an emergency meeting in the hope of breaking the deadlock over Greece’s debt crisis. For the last five months, the anti-austerity government of Prime Minister Alexis Tsipras has been at odds with Greece’s international creditors, who say they will only disburse the last chunk of held-up rescue funds to Greece in return for Athens committing to further cuts. Eurozone finance ministers, known as the Eurogroup, are holding an emergency meeting in the hope of breaking the deadlock over Greece’s debt crisis. For the last five months, the anti-austerity government of Alexis Tsipras has been at odds with Greece’s international creditors, who say they will only disburse the last chunk of held-up rescue funds to Greece in return for Athens committing to further cuts.
Why is the meeting important?Why is the meeting important?
Greece faces a €1.6bn (£1.1bn) debt repayment to the International Monetary Fund on Tuesday and its bailout programme expires the same day. German Chancellor Angela Merkel said on Friday that the Eurogroup meeting “will be decisive because time is of the essence”. Greece faces a €1.6bn (£1.1bn) debt repayment to the International Monetary Fund on Tuesday and its bailout programme expires the same day. German chancellor Angela Merkel said on Friday that the Eurogroup meeting “will be decisive because time is of the essence”.
Related: Greece crisis: Hopes for deal as differences narrow – liveRelated: Greece crisis: Hopes for deal as differences narrow – live
Saturday is realistically the last chance for Tsipras to strike an agreement because the country’s lenders are demanding that the parliament in Athens ratifies any deal before markets open on Monday. Without a deal, Greece will not get the last €7.2bn of bailout funds – money it needs to repay that €1.6bn.Saturday is realistically the last chance for Tsipras to strike an agreement because the country’s lenders are demanding that the parliament in Athens ratifies any deal before markets open on Monday. Without a deal, Greece will not get the last €7.2bn of bailout funds – money it needs to repay that €1.6bn.
What will it take to achieve a deal?What will it take to achieve a deal?
Key sticking points concern pensions, VAT rates and taxation.Key sticking points concern pensions, VAT rates and taxation.
On pensions, differences centre on how quickly to raise the retirement age, on a top-up scheme for poorer pensioners, and on early retirement.On pensions, differences centre on how quickly to raise the retirement age, on a top-up scheme for poorer pensioners, and on early retirement.
On VAT, the creditors want Greece to raise more than it is proposing from a sales tax.On VAT, the creditors want Greece to raise more than it is proposing from a sales tax.
On other taxes, Greece and its creditors differ over the corporate rate and Tsipras’s proposal to impose a one-off tax on all corporate profits over €500,000.On other taxes, Greece and its creditors differ over the corporate rate and Tsipras’s proposal to impose a one-off tax on all corporate profits over €500,000.
What happens if there is a deal?What happens if there is a deal?
If agreement is struck on Saturday, the terms would need to be rushed through the Greek parliament on Sunday, then through the Bundestag in Berlin on Monday, in order to ensure that the bailout programme, which expires on Tuesday, is extended.If agreement is struck on Saturday, the terms would need to be rushed through the Greek parliament on Sunday, then through the Bundestag in Berlin on Monday, in order to ensure that the bailout programme, which expires on Tuesday, is extended.
What happens if there isn’t a deal? What happens if there isn’t?
Greece will not get its bailout money and will miss its payment to the IMF. The bailout will expire the same day and without the shelter of a rescue deal, the European Central Bank is expected to cut off emergency support to Greek banks, who are relying on the central bank to cover deposit withdrawals that reached more than €4bn last week.Greece will not get its bailout money and will miss its payment to the IMF. The bailout will expire the same day and without the shelter of a rescue deal, the European Central Bank is expected to cut off emergency support to Greek banks, who are relying on the central bank to cover deposit withdrawals that reached more than €4bn last week.
Will Greece need to leave the euro?Will Greece need to leave the euro?
Without the ECB lifeline, Tsipras could be forced to impose capital controls, limiting the money savers can withdraw from banks, or closing the banks entirely to stop money flooding out of accounts. Without enough euros in the economy, Greece will have to consider launching a parallel currency to pay public sector wages and pensions. Economists are talking about Greece “drachmatising”.Without the ECB lifeline, Tsipras could be forced to impose capital controls, limiting the money savers can withdraw from banks, or closing the banks entirely to stop money flooding out of accounts. Without enough euros in the economy, Greece will have to consider launching a parallel currency to pay public sector wages and pensions. Economists are talking about Greece “drachmatising”.
What will it mean for Greeks?What will it mean for Greeks?
On the ground, a Greek exit from the euro, or Grexit, could leave people struggling to get basic items. Greece would need to pay for its imports with a devalued currency, so the cost of energy would rise and shortages of food and medicine are not unthinkable. Inflation would probably be rampant.On the ground, a Greek exit from the euro, or Grexit, could leave people struggling to get basic items. Greece would need to pay for its imports with a devalued currency, so the cost of energy would rise and shortages of food and medicine are not unthinkable. Inflation would probably be rampant.
What if I have booked a holiday to Greece?What if I have booked a holiday to Greece?
Holidaymakers heading to Greece are being advised to take plenty of cash with them amid fears the country’s cash machines could be shut down.Holidaymakers heading to Greece are being advised to take plenty of cash with them amid fears the country’s cash machines could be shut down.
For those visiting other parts of the eurozone, they will find their spending money goes further as the euro continues to weaken against the pound.For those visiting other parts of the eurozone, they will find their spending money goes further as the euro continues to weaken against the pound.
What would Grexit mean for the global economy?What would Grexit mean for the global economy?
Grexit would be felt throughout financial markets and in the real economy it would rattle consumer and business confidence.Grexit would be felt throughout financial markets and in the real economy it would rattle consumer and business confidence.
The charge towards safe-haven assets such as German government bonds would continue while investors would dump bonds from other countries shaken by the eurozone crisis, such as Spain and Italy. Stocks in financial companies would come under pressure and the euro would probably weaken against other big currencies.The charge towards safe-haven assets such as German government bonds would continue while investors would dump bonds from other countries shaken by the eurozone crisis, such as Spain and Italy. Stocks in financial companies would come under pressure and the euro would probably weaken against other big currencies.
However, analysts hope the effects would be short-lived thanks to the ECB stepping in with more quantitive easing.However, analysts hope the effects would be short-lived thanks to the ECB stepping in with more quantitive easing.
In the UK, the government has been stepping up contingency planning for the “serious economic risks” posed by a Greek default and a possible Grexit.In the UK, the government has been stepping up contingency planning for the “serious economic risks” posed by a Greek default and a possible Grexit.
Meanwhile, manufacturers have warned about the damage to their exports from a strong pound against the euro, which makes UK goods more expensive in their biggest market, the eurozone.Meanwhile, manufacturers have warned about the damage to their exports from a strong pound against the euro, which makes UK goods more expensive in their biggest market, the eurozone.