Greece submits new reform plan but creditors unimpressed - as it happened

Graeme Wearden

from on 2015-06-09 20:36 (#AQQT)

Greek officials have proposed a new plan to break the deadlock, as prime minister Alexis Tsipras warns failure would be the beginning of the end of the eurozone.

9.34pm BST

And finally... you know the crisis has reached a tipping point when this happens:

Keep calm & reform #Greece @yanisvaroufakis http://t.co/wL8reqmRqo pic.twitter.com/dBhYRAjddd

@GuyVerhofstadt This is precisely what we ask for: An opportunity to reform deeply. Which cannot be done under even greater austerity...

FFS, is this what it's really come to? https://t.co/ZGrbSVoWUq

9.10pm BST

Even the most sensationalist hack would struggle to get excited about Wall Street tonight. The Dow Jones index fell a mere 0.01%, while the broader S&P 500 gained a single point.

Dow ends lower by 3 points, according to early data. http://t.co/niE7wmOjeE pic.twitter.com/BmKnqm7c9m

8.42pm BST

Volker Kauder, caucus leader of Chancellor Angela Merkel's bloc in parliament, has also shown impatience with Greece's strategy tonight.

Kauder said:

"It's not possible that the borrower decides under what conditions the lender kindly gives his money,"

"We want Greece to stay in the euro, but whether this is achievable depends entirely on Greece."

8.31pm BST

7.31pm BST

Mood seemed to really darken today in #Greece talks. @JunckerEU told college Athens "has lost the @EU_Commission" http://t.co/jnhpEOx3fz

7.10pm BST

Greece may have burned its bridges with Jean-Claude Juncker too!

As we flagged up earlier, Juncker has been cool about meeting Alexis Tsipras at Wednesday's summit. And AFP has learned that the EC president has been telling colleagues that it's not worth the effort.

Juncker told fellow European commissioners on Tuesday that a new Tsipras meeting would be a "waste of time" and that it would be "better to meet with the Latin Americans", an EU source said.

Juncker told commission meeting Tsipras tmrw 'waste of time', wd be 'better off meeting Latin Americans' - sources https://t.co/h0aLd5GxA9

7.04pm BST

Was it just another day in the Greek crisis -- with Athens submitting proposals, creditors saying more work is needed, and the roundabout spinning again?

Perhaps not. The FT's Peter Spiegel reports tonight that the cautious optimism in Brussels is being replaced by "fear and suspicion".

Gone this time were the private reassurances that a deal would ultimately be concluded, allowing the Greek government to receive an infusion of euros before its bailout expires at the end of the month.

Instead, officials from various institutions involved in the talks now worry that Greece's hard-left government is dangerously miscalculating. Athens, they believe, is intentionally prolonging the negotiations to the last minute in a belief that its creditors will eventually "blink" and agree to grant wholesale debt relief and new bailout cash with few strings attached.

6.27pm BST

Some Greek MPs are pushing Alexis Tsipras to hold firm:

22 SYRIZA MPs ask Greek PM Tsipras for collective bargaining to be restored & min wage raised. Lenders have asked for no rollback #Greece

5.47pm BST

Correction! London's stock market actually fell to a three-month low tonight:

Fortunately my colleague Nick Fletcher knows the score:

Leading shares hit a near three month low, on continuing worries about Greece, rising bond yields and talk of a US rate rise.

In a broad based sell-off the FTSE 100 fell 36.24 points to 6753.80, its lowest level since 13 March. European markets were also lower, with Germany's Dax down 0.7% and France's Cac falling 0.19%.

5.28pm BST

#FTSE 100 biggest risers: Royal Mail (+2.30%), Mondi (+1.97%), Intu Properties (+1.49%)

#FTSE 100 biggest fallers: Pearson (-2.38%), Anglo American (-2.00%), Astrazeneca (-2.00%)

5.13pm BST

It was a day to forget on the Frankfurt stock market, where the Dax lost another 0.55% (the white line on this chart).

#Germany's Dax drops to 11k on Bund rout. 10yr yields continue to rise towards 1%. pic.twitter.com/e3hq1foebR

5.02pm BST

Is the EU Commission president still fuming, after hearing his efforts savaged in the Athens parliament on Friday?

According to officials cited in the Greek media, he may well be, writes Helena Smith.

4.19pm BST

Valdis Dombrovskis, the EC vice-president with responsibility for the euro, believes a Greek deal can be reached in the coming days.

EU's @VDombrovskis says Greek debt deal possible 'in coming days', @AFP alerting ex-Strasbourg

3.50pm BST

Wolfango Piccoli of Teneo Intelligence reckons Greece will be forced into a "take it or leave it" deal by its creditors in time for the next Eurogroup meeting, on 18 June.

By that stage, Tsipras would have to swallow pension reforms, as the only alternative will be capital controls.

In this sense, rumours that the revised Greek proposal constitutes no substantial improvement are not particularly surprising.

3.25pm BST

Newsflashes from Athens - Alexis Tsipras has met with top members of his Syriza party, and urged them to support him at this critical time.

Tsipras, who looked quite relaxed arriving at the meeting (is that a new jacket?) also told MPs that he is not planning to call fresh elections:

2.42pm BST

It must be time for a recap.

#Greece officials believe they've moved half the distance on surplus targets and want creditors to do the same. 0.75% in 2015, 1.75% in 2016

"Two complimentary texts of proposals were handed over to the commissioner Pierre Moscovici, with the aim of closing the fiscal gap with alternative proposals and coming up with a possible plan of sustainability for the Greek debt."

"What has been submitted is not sufficient to move the process forward," said one EU official. Another said it was "not sufficient and not acceptable to member states".

RTRS reports that #Greece & creditors aiming for a baseline agreement today so that Tsipras can seal deal w/ German & French leaders on Wed

"That would be the time that the government would have to come to a big agreement."

It would be the beginning of the end of the eurozone.

If the European political leadership cannot handle a problem like that of Greece, which accounts for 2% of its economy, what would the reaction of the markets be to countries facing much larger problems, such as Spain or Italy which has two trillion of public debt?

"You shouldn't waste much time on these rumours."

Naftemporiki: "Time is Running Out" #Greece MT @naftemporikigr pic.twitter.com/wvJZAACeSq

1.59pm BST

Some afternoon reading.

Andrew Farlow, research fellow in economics at Oriel College, Oxford, has outlined how Greece's unsustainably debts have been created by the flawed structure of the eurozone, which encouraged the flow of cheap credit from German and French banks to the periphery.

At first, the German people welcomed the artificial upside of the euro, and passed the systemic risk consequences on to countries like Greece. Now, as the prospects for Greece worsen and the euro becomes more depressed, Germany's exports receive a boost, and Germans become even less sympathetic. Meanwhile, all those panic-driven flows of capital flooding back into Germany have pushed ten-year German bond rates from about 3% in early 2011 to nearly zero today, easing Germany's own budget problems. No wonder its politicians have been disinclined to spell out the optimal loss-mitigation strategy for Germany and the eurozone.

The stark reality is that Greece's creditors must choose between two unpalatable scenarios. One is that Greece will leave the euro and default on its euro-denominated debt, its creditors will not get repaid anyway, and costly speculative pressures will mount on Portugal, Spain and Italy, while Greece itself will become more unstable politically and economically. The alternative is that Greece will stay, and its creditors will have to allow some further write-down on Greek debt. The latter scenario is surely the less painful.

1.44pm BST

Italy's finance minister, Pier Carlo Padoan, has rejected Alexis Tsipras's claim today that the eurozone would eventually collapse if Greece left.

1.18pm BST

Schiuble has also denied reports of a rift with Angela Merkel over Greece.

Don't waste your time with such rumours, he insists.

1.12pm BST

Over in Berlin, Germany's finance minister Wolfgang Schiuble is telling reporters that he still disagrees with his Greek counterpart, Yanis Varoufakis, on some issues despite yesterday's meeting.

Via Reuters:

In other news, the earth still appears to be revolving around the sun... https://t.co/3UqJAYx4x5

FIN fin-min Stubb, beside DE counterpart Schaeuble: ''I am sure there are a few finance ministers whose patience is running out'' #Greece

#Likeminded - Der finnische Finanzminister @alexstubb zu Gast bei Freunden. pic.twitter.com/SCCAyKJXL5

12.57pm BST

Dow Jones newswires have some firm details of Greece's new proposal.

It confirms that Athens has promised tougher budget targets - but still not as stretching as the creditors want.

#Greece's latest proposal sees higher surplus targets than previous proposed: Prim surplus at 0.75% in 2015, 1.75% in '16, 2.5% in '17 (DJ)

12.49pm BST

We shouldn't blame Greece entirely for the moves in the markets today.

Mining stocks were hit by weak Chinese inflation data released overnight, and there are also worries that the US Federal Reserve is likely to raise interest rates in September.

12.42pm BST

Greece's stock market is defying the selloff; The Athens ATG index is up 2% today.

12.40pm BST

Fears over Greece have pushed Europe's stock markets lower through the morning.

All the main indices are in the red, with the Stoxx Europe 600 hitting its lowest level since 20 February (later that night, Greece's four-month bailout extension was agreed).

The London market is somewhat sheltered from the uncertainty in the eurozone, but whenever there is a decline in continental Europe the British market isn't far behind.

The value that was added to eurozone stock markets on the back of QE is quickly being eroded due to Greece, and with the payback deadline looming dealers are doing their utmost to get out.

12.33pm BST

Greece's short-term debt is under pressure this morning, pushing the yield (or interest rate) on two-year bonds up from 24.9% to 25.1%.

That suggests the debt is seen as even riskier.

New Greek reform proposal in cash-for-reform talks not sufficient, EU Officials say. 2y ylds continue to rise. (RTRS) pic.twitter.com/tyJGEEHOtG

12.24pm BST

Reuters is now also reporting that Greece hasn't gone far enough for Europe's liking:

12.11pm BST

Greek officials insist that their team in Brussels have narrowed the gap over fiscal targets and reforms with creditors.

That convergence follows the arrival of minister of state Nikos Pappas, prime minister Alexis Tsipras' closest ally, in Brussels on Monday, leading to today's new proposals.

11.50am BST

The Greek government has just issued one of its famous non-papers confirming that it has indeed delivered an updated version of its proposals, in an attempt to "close the gap" with creditors.

"The Greek government after the expression of opposition to the proposal [made by] the institutions by all the Greek parties is continuing negotiations on a political level on the basis of the proposal that it has given them.

11.39am BST

Another Brussels insider has rubbished Greece's latest proposal, to German TV journalist Stefan Leifert.

New Greec reform proposal in Brussels. Someone who knows the paper: "We are appalled. Unsure, if this is a basis for further negotiations."

11.30am BST

Over in Brussels, European Commission spokesman Margaritis Schinas has been fielding a lot of questions from the press pack about the Greek bailout talks.

Will Juncker meet Tsipras Weds? 'We have to complete this assessment and in the light of this assesment we can then discuss tomorrow'

11.06am BST

Journalists in Athens are being briefed that two documents have indeed been drawn up, and handed to European Commissioner Pierre Moscovici.

One covers fiscal issues. The second outlines Greece's plan for achieve debt sustainability. And together they're Greece's latest attempt to reach a compromise.

Greek gov source: 2 extra dox w proposals given to @pierremoscovici Mon to bridge fiscal gap and define viable plan for debt sustainability

I understand Greek proposal involves debt reschedule + fiscal framework - eg new fiscal architecture concessions. Ie not just ESM/ECB swap,

10.53am BST

We still don't know exactly what's in the two Greek proposals, but Bloomberg is reporting that one EU official has already claimed it doesn't go far enough it.

Their Athens bureau chief, Nikos Chrysoloras, reports:

The Greek government submitted a three-page budget proposal to its creditors in Brussels in a bid to unlock bailout funds, two international officials with direct knowledge of the discussions said.

The document covered only fiscal targets, one of the people said. Greece gave its creditors a separate note, also three pages long, on how to address the country's financing needs, in which the government asked to use funds from the European Stability Mechanism to repay about a6.7bn ($7.6bn) of bonds held by the European Central Bank that come due in July and August, the people said.

"One of the officials said the revised Greek plan is a vague rehash of earlier proposals" http://t.co/VE8uACWPry

10.21am BST

Austria's finance minister, Hans Jirg Schelling, has warned Greece not to expect any slack from its lenders.

"I believe that the institutions and creditors have made so many concessions to the Greeks that I cannot imagine that there can be further concessions."

10.07am BST

More data....and Eurostat has confirmed that the eurozone economy grew by 0.4% in the first three months of this year.

That's faster than the UK (+0.3%) and the US (which contracted almost 0.2% quarter-on-quarter).

Among Member States for which data are available for the first quarter of 2015, the Czech Republic (+3.1%), Cyprus and Romania (both +1.6%) recorded the highest growth compared with the previous quarter, followed by Poland (+1.0%), Bulgaria and Spain (both +0.9%), Hungary, Slovenia and Slovakia (all +0.8%).

Decreases were registered in Lithuania (-0.6%), Estonia (-0.3%), Greece (-0.2%) and Finland (-0.1%).

10.02am BST

Britain's trade gap has hit the lowest level in 13 months.

The total trade deficit dipped to 1.2bn in April, from nearly 3.1bn in March. That suggests net trade could be a smaller drag on growth.

A much better set of trade figures. Overall deficit narrows to 1.2bn in April from 3.2bn March. Bodes well for Q2 GDP.

9.55am BST

Reality check. An EU official has just told Bloomberg that this new proposal is a "vague rehash" of earlier Greek plans, and questioning how credible it is.

Kathimerini was reporting last night that Athens was proposing to raise VAT rates a little, but keep the 7% lowest rate. And it was prepared to offer a higher primary surplus target this year, nearer to the creditors' 1% target.

9.45am BST

Make that a seven-page proposal -- broadly split between proposed measures, and plans to cover Greece's funding problems over the coming months.

#Greece submitted a 7-page revised proposal, 3 pages on fiscal issues & 4 pages on covering funding gap (via @kathimerini_gr) #ec #ecb #imf

9.31am BST

Shares are rallying in Athens on hopes of a breakthrough.

The ATG index has jumped almost 3%, even though we don't know what's in this new proposal, or whether it closes the gap with creditors.

#Greece stock market rebounds 2.9% in the aftermath of submission of revised proposal to institutions. #economy #ec #ecb #imf #markets

9.18am BST

Over in Athens, there is much talk that a deal that would extend the country's bailout programme until the autumn (at the very least) is now seriously being pondered (as the Wall Street Journal reported last night)

"That would be the time that the government would have to come to a big agreement."

"The Greek government wants an agreement-solution. It wants this to be the last negotiation. The Greek people deserved it."

9.16am BST

Our Europe editor, Ian Traynor, confirms that the idea of swapping existing Greek debt held at the European Central Bank for new bailout loans isn't new.

It all depends what Greece is offering in return...

#grexit ecb/esm debt swap old. depends what @atsipras is offering on greek side

9.06am BST

Over to Reuters for details of this morning's key development.

The European Commission has received a new proposal from Greece for reforms that could unlock new funding from the cash-strapped country and is now assessing it, an EU official said on Tuesday.

The proposal was originally due last Thursday. It is to bridge the remaining differences between Athens and its international creditors on issues like pension or Value Added Tax reform.

#Greece: new proposal for creditors said to be 3-page long, only covering fiscal targets. Plus another 3 pages to roll #ECB bonds into ESM.

9.02am BST

Greek media were reporting this morning that EU president Jean Claude Juncker had threatened not to see Tsipras if he was not sent an updated proposal from Greece pronto.

Perhaps that prompted today's burst of activity...

9.00am BST

It's official! The European Commission has confirmed to Reuters that it has received a new proposal from Greece's officials this morning.

They're now assessing it....

8.59am BST

Greece is also proposing that Europe's main bailout fund, the European Stability Mechanism, would provide help it.

Today's three-page plan apparently suggests the ESM buys the a6.7bn of Greek bonds held by the European Central Bank, which mature in July and August.

In layman's terms, this is called "a bailout" RT @lemasabachthani: GREECE SAID TO ASK CREDITORS FOR ESM MONEY TO REPAY ECB

8.52am BST

Crumbs: Greece has reportedly cut its 47-page list of reforms down to just three pages.

GREECE SAID TO SUBMIT REVISED 3-PAGE PROPOSAL TO CREDITORS

*GREEK PROPOSAL SAID TO REQUEST INCREASE IN T-BILL CEILING

8.48am BST

Greece's negotiators have handed a new proposal to its creditors this morning, according to the AFP newswire.

Greece submits new reform plan to creditors, European source tells @AFP, via @CSpillmann

8.43am BST

Could the Greek crisis be resolved at year's Bilderberg conference?

No, probably not. But Greece is sandwiched between 'Globalisation' and 'Iran' on his year's agenda at the world's most exclusive gathering of the powerful.

8.23am BST

European stock markets have nudged a one-month low at the start of trading.

The FTSEurofirst 300, which tracks the biggest companies across the region, dipped 0.4% in early deals.

A weaker than expected inflation reading from China has added another layer of uncertainty into matters, coming on top of yesterday's unexpectedly large fall in imports.

8.10am BST

Alexis Tsipras has also argued that a deal between Greece and her creditors could be close.

However, that would require the IMF, ECB and EC to relax their demands on pension reforms, and other proposals which would push Greece deeper into recession.

"I think we're very close to an agreement on the primary surplus for the next few years.... There just needs to be a positive attitude on alternative proposals to cuts to pensions or the imposition of recessionary measures."

8.01am BST

Our Greek readers may have had a disturbed night, after the country was rattled by a magnitude 5.2 earthquake around 4am. No reports of injuries, fortunately.

Please no. The last thing we need now is an #earthquake"@guardian: magnitude 5.2 tremor felt in #Athens http://t.co/m1RqnqWtPI"

7.49am BST

If Greece fails, it will be the beginning of the end of the eurozone.

I think it's obvious.

It would be the beginning of the end of the eurozone. If the European political leadership cannot handle a problem like that of Greece, which accounts for 2% of its economy, what would the reaction of the markets be to countries facing much larger problems, such as Spain or Italy which has two trillion of public debt?

Tsipras writing in Corriere says #Grexit would be beginning of the end for Euro Zone

If Greece fails markets will go now to look for the next. If the negotiation fails, the cost to European taxpayers will be huge.

After five years of austerity it is inconceivable that we are required to abolish the lowest pensions and subsidies that affect the poorest citizens.

#Grexit e crollo #Europa sono interconnesse. #Tsipras al @Corriereit minaccia i creditori. @andrea_nicastro pic.twitter.com/nrAjNb39qw

7.47am BST

Good morning, and welcome to our rolling coverage of the Greek bailout, and other events across the world economy, the financial markets, the eurozone and business.

It will be another day of negotiations and speculation, as Greece now has just 22 days before its bailout extension expires.

The proposal, first presented last week, is part of European officials' efforts to prod the government in Athens to agree to painful concessions in exchange for rescue funds.

But continued disagreements over the economic overhauls and austerity measures demanded by Greece's lenders risk undermining the plan, people familiar with the plans say.

Extension by Feb, by Jun - then rumored by Sep, now by Mar. A bumpy & lengthy road ahead with drops of hope. #Greece #economy #ec #ecb #imf

"What we offered would mean that Greece is fully financed until March 2016," one of the people said.

Latest source comments suggest the latest proposal on the table for Greece involves a bailout programme extension until Mar'16

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