Greece and eurozone agree to resume bailout talks; Unilever shares fall after Kraft walks – as it happened
All the day's economic and financial news, including the unravelling of Kraft Heinz's pursuit of Unilever and a Greek bailout meeting
- Latest: Greece and creditors will discuss fresh measures
- New measures on tax, pensions and labour market reforms
- Deal could pave way to next bailout payment
- But Athens must legislate new measures first
Earlier:
6.01pm GMT
That's all for today. Time for a quick wrap-up.
There will be a change in the policy mix,moving perhaps away from austerity and putting more emphasis on reform."
Breaking - IMF says 'more progress' needed for full Greek deal - AFP
Greece's two-year bond yield falls over 60 basis points as bailout monitors agree to Athens return https://t.co/HKzKLtWiHo pic.twitter.com/Xx80fDUBAs
5.34pm GMT
The IMF has issued a cautious statement, welcoming Greece's commitment to satisfying its creditors...but warning that there's no guarantee of an agreement on new measures.
The #IMF's statement about the outcome of the #Eurogroup pic.twitter.com/w7o5iKWogS
5.21pm GMT
Dublin MEP Nessa Childers isn't convinced:
"Deep" reforms? This will end badly. If at all. 'Greece agrees on new bailout reforms' https://t.co/shFJAif5Nt
5.01pm GMT
Q: Given that Greece and the institutions must agree new measures, and the government must legislate them, when can we realistically expect Greece to get its next bailout payment?
There's still a lot of work to do, and a lot of issues to discuss and calibrate, so I want to temper expectations, Dijsselbloem says.
If we do it in March, we'll do it in March.... If not, we'll do it later. We'll do it well in time.
4.54pm GMT
Q: Do you think Greece and the institutions will agree a package that persuades the International Monetary Fund to join the bailout, and will you provide the next tranche of bailout funds if not?
Dijsselbloem says the IMF wants to see Greece's economy recovering, and see that its debts are sustainable.
4.51pm GMT
Dijsselbloem says he can't put a figure on today's agreement, as some measures are still being discussed. But what has been agreed is "to the liking of the IMF" he adds.
4.49pm GMT
Q: Does today's agreement mean the end of austerity in Greece?....
Jeroen Dijsselbloem slaps this idea down straight away! I'm a finance minister, he says, I can never promise the end of austerity, as finance ministers must maintain a tight budget and ensure it is sustainable.
.@J_Dijsselbloem We should see this as a turn from austerity to more structural reforms-if things go acc to plan there will be fiscal space
I am a minister of finance, I can never promise the end of austerity, says Dijsselbloem, living up to his reputation.
4.46pm GMT
There's some relief in the bond market:
Greece's 2y yields drop as #Eurozone, #Greece reach deal on return of bailout inspectors. https://t.co/tObS1a5PL4 pic.twitter.com/pBwIxFD0Ko
4.44pm GMT
Q: Must the Greek government legislate any fresh measures before the mission teams will return?
No, Dijsselbloem replies, the institutions will now return to Athens. They will talk to the Greek authorities about the specifics of tax reforms, pension reforms, the labour markets, etc.
Upfront legislation of measures will be needed after mission chiefs return to Athens & agreement w #Greece gov't, #Eurogroup President says.
4.43pm GMT
Dijsselbloem: Collective wage bargaining will be part of talks. Other issues will be "reopened" #Greece pic.twitter.com/6IOrs1ADpz
4.41pm GMT
Q: The Greek government has just told us that they won't take one euro of extra austerity, so how can they stick to today's agreement?
Dijsselbloem says that both sides are looking to change the focus of the Greek bailout programme, away from austerity and towards structural reforms.
4.39pm GMT
Onto questions...
Q: Who gave ground today to allow the teams from Greece's creditors to return to Athens?
4.32pm GMT
Commissioner Pierre Moscovici tells the press conference in Brussels that both sides are committed to reaching an agreement on new fiscal measures.
Today's agreement is an important step, he insists.
EU's Moscovici: Nothing is resolved yet but there is the will to resolve it. #Greece #Bailout pic.twitter.com/IYyxTT5rn5
4.28pm GMT
Some instant reaction to the Greek breakthrough, starting with Slovakia's finance minister:
Mission experts will return to #Greece trying to sort things out. We shall see how it goes. #Eurozone #IMF #ESM #ECB
Greece confirms it will legislate more bailout commitments after program ends. So austerity for longer#Greece
"deep reforms" the new buzzword too #Greece
Dijsselbloem's "changed policy mix": less extend, more pretend #Greece
4.26pm GMT
It's Official! Greece's creditors are heading back to the capital, to discuss a new package of measures to ensure it is keeping up with its bailout requirements.
Eurogroup president Jeroen Dijsselbloem says that enough progress has been made for officials to return to Athens "in the very short term".
Reforms on tax, pensions, labour market
"change in policy mix away from austerity, more emphasis on deep reforms" (Dijsselbloem) 2/2 #Greece
Creditor mission going back to #Greece to talk about "additional package of structural reforms" says Dijsselbloem 1/2
4.21pm GMT
And we're off....
Eurogroup president Jeroen Dijsselbloem starts by apologising for the early finish of today's meeting, and jokes that many reporters will consequently miss this press conference.
4.19pm GMT
Greece's government is claiming victory, arguing that today's agreement won't mean additional austerity.....
#Greek gov issues one of its famous "non papers" saying deal has been cut "without a euro more of austerity"
#Eurogroup presser yet to start & #Greek gov is already sounding triumphant - session so quick many asking if agreement reached before
4.15pm GMT
The latest from Brussels....
#Eurogroup finished. Deal Greece-creditors reached. Pre-legislation of reforms balanced w counter-measures, no more austerity(Greek gov src)
Breaking - Greece agrees to compromise on reforms at Eurogroup meeting - AFP
Institutions returning to Athens after 'complete reversal' of climate at Eurogroup, say #Greece govt sources https://t.co/q4FKs92H0E
4.11pm GMT
Our Athens correspondent Helena Smith has the details of today's deal -- Athens is agreeing to legislate for further fiscal reforms that might kick in, if required, in 2019.
#Greek gov says it will accept legislation of measures tt depending on fiscal performance may or may not be enforceable as of 01/01/2019
4.10pm GMT
Greek bond yields are rising in value, following these reports that a deal has been hammered out to allow creditors to return to Athens for fresh talks.
4.03pm GMT
In a rare and unexpected development, today's Eurogroup meeting has ended ahead of schedule!
#Eurogroup is over. That was quick!
4.02pm GMT
German MEP Markus Ferber has fired a warning shot at Athens, by issuing a statement urging the Greek government to step up the implementation of its bailout programme.
Ferber says:
"I expect a clear signal by the Eurogroup today. It is not the time for new compromises, new concessions or even debt relief. We have seen a lot of this in the past and preciously little has changed. Now it is time for the Greek government to deliver. There is a very long to-do list for the Greek government to start working on. Otherwise, the money supply must be shut off.
Upping the pressure is first of all a question of credibility, but would also send the signal to the International Monetary Fund that the Eurogroup means business and wants the IMF to stay on board."
3.53pm GMT
While we wait for a press conference in Brussels, here's some photos from today's Eurogroup meeting:
3.29pm GMT
Further confirmation of a mini-breakthrough in Brussels:
Greek gov has agreed to pre legislate measures opening the way for return to #Athens
3.27pm GMT
Greek journalist Ioannis Antypas has also heard that Greece and its lenders have made enough progress to allow talks to resume in Athens:
#Eurogroup Meeting of Greek FinMin with lenders went well. Possible announcement of return of heads of mission today.
2.46pm GMT
Well-placed sources in Athens in contact with officials in Brussels are reporting that there has been a "convergence of views" - enough to allow auditors to return to the Greek capital and continue the bailout review.
"Whatever will be agreed will be a bad deal which [prime minister Alexis] Tsipras will have to sell to Syriza and to the Greek public."
2.02pm GMT
You can (usually) rely on European Commissioner Pierre Moscovici to take an optimistic view of events....
.@pierremoscovici Confident we can have a very positive meeting of the #Eurogroup today. Hopeful that teams can return to Athens very soon
2.00pm GMT
The #Eurogroup begins. pic.twitter.com/yXV5imcHHW
1.58pm GMT
Here we go! Eurogroup president Jeroen Dijsselbloem has arrived at today's meeting.
Dijsselbloem tells the assembled press pack that ministers will discuss whether to sent their officials back to Athens to resume negotiations over the bailout programme. He says that he wants to conclude the review soon, but the issues are complex.
@J_Dijsselbloem : My goal is to get the missions in Athens as soon as possible pic.twitter.com/QUJYDJFEzO
Eurogroup's @J_Dijsselbloem - 'we've had intense talks to clear ground for mission to return to Athens - see today if we've done enough'
Dijsselbloem: 'Anyone who wants to talk about crisis can talk to someone else, because the Greek economy is recovering'
1.48pm GMT
Germany's Wolfgang Schauble has told reporters outside today's Eurogroup meeting that he doesn't expect a breakthrough over Greece's bailout today.
But he's still confident that the two sides will agree what further reforms Athens must take, in time.
Schaeuble: (Reforms) in Greece usually take longer than planned "but we'll get there" #Greece #Eurogroup pic.twitter.com/mN0KvE1acN
Germany's Schaeuble says believes lenders have reached 'common position' on Greece - AFP
1.23pm GMT
Slovakia's finance minister, Peter KaA3/4imir, has warned against allowing Greece's bailout problems to overshadow this year's elections in France, Germany and the Netherlands.
But he's also not willing to wave through debt relief for Athens, just to get the issue out of the headlines.
Back in town for #Eurogroup meeting. Key topic to discuss today is #Greece. Here's my view 1/7
Yes, #Greece is heading into the right direction, but more needs to be done on both sides of the table. #eurozone #ECB #IMF #ESM 2/7
It's positive to hear from #ESM Klaus #Regling we will need far less money from the 3rd bailout package. 3/7
Let's hope we close the review in the coming weeks. 4/7
We have elections in #Netherlands, #France & #Germany. I can tell from my experience that #Greece is topic you want to avoid in campaign 5/7
As for our friends from the #IMF, we like them and it's good to have them on board of course. #Greece #ECB #eurozone #ESM 6/7
But I'm not willing to pay any price for their participation, green-lighting the #IMF kind of debt relief-which #Greece does not need. 7/7
1.18pm GMT
Eurozone finance ministers are arriving in Brussels for this afternoon's Eurogroup meeting.
Bloomberg reports that Germany's Wolfgang Schiuble has been talking about Britain's exit from the EU:
*SCHAEUBLE: MUST AVOID OTHERS FOLLOWING U.K.'S BREXIT EXAMPLE
GERMAN FINMIN SCHAEUBLE SAYS BRITISH GOVERNMENT OFFICIALS ARE ONLY NOW STARTING TO REALIZE HOW DIFFICULT BREXIT IS GOING TO BE
Related: Divide and rule tactics could leave UK without deal, say EU politicians
12.50pm GMT
Bon Dieu! French government bonds are suffering a nasty selloff as Marine Le Pen wins more support ahead of this spring's presidential elections.
New opinion polls show the Front National candidate would win 42% of the vote if she faced centrist Emmanuel Macron in a two-way run-off for the presidency, and 44% against right-winger Francois Fillon.
French 10Y Bund spread widest since August 2012 after Le Pen breaks 40% ceiling versus Macron and Fillon in polls for run-off vote pic.twitter.com/RbrUzF2AvJ
French-German 10Y spread shooting through the roof at lunch time. Bon appi(C)tit! pic.twitter.com/mOYmOLUEcE
French 10yr yields popping off pic.twitter.com/l0AGnAfp3J
12.25pm GMT
Over in Downing Street, Theresa May's spokesman has insisted that she didn't influence Kraft's decision to withdraw its offer for Unilever.
"I think the issue of the withdrawal from the Unilever deal by Kraft is an issue you should put to Kraft. Number 10 wasn't involved in it.
"The simple fact is that the bid has been withdrawn so I don't have a view on a bid that doesn't exist."
11.50am GMT
Germany is also downplaying expectations ahead of today's Eurogroup meeting on Greece:
German FinMin Spokesman: Not Expecting EZ FinMins To Reach Deal On Greece Today - RTRS
11.37am GMT
Over in Greece, officials are warning that it will require a miracle for a breakthrough to be reached at the Eurogoup of euro area finance ministers this afternoon.
With the exception of Eurogroup head, Jeroen Dijsselbloem, who is pushing for a solution before Dutch elections next month, there is almost no one who believes much more than the "framework of an agreement" can be reached today.
"We are really looking towards the German chancellor's meeting with [IMF chief Christine] Lagarde on Wednesday,".
"Bar a miracle there won't be a solution today."
"I never made any ['Grexit'] threats...I'm confident that Greece is on the right path."
#Greece's 2y yields jump to highest since Jun2016 ahead of #Eurogroup meeting as hopes of breakthrough dissipated. https://t.co/hy8wljxCHg pic.twitter.com/lB2pPOLBsb
11.30am GMT
Just in: UK factories are enjoying a surge in demand, driving order books to their highest level in two years.
After Friday's soft retail sales numbers better news from #CBI_ITS seeing order book balance at highest level since late 2014 pic.twitter.com/6aCa7WvmHj
11.20am GMT
The pound has begun the week on the front foot, gaining half a cent against the US dollar to 1.246.
But it's still almost 10% weaker than 12 months ago, when David Cameron announced the date of the EU referendum.
A year ago today David Cameron announced the date of the #EuRef vote. Sterling is a little over 10% weaker on a trade weighted basis since. pic.twitter.com/qx9nyTDfac
11.11am GMT
The cost of insuring Unilever's debt against default has also dropped sharply today.
That shows that bondholders are relieved that the threat of a Kraft Heinz takeover has faded away.
Unilever best performer in Eur CDS after Kraft pulls out. 5Y spread 8bps tighter at 30bps, still 5bps off pre-deal level
10.08am GMT
Heads-up: Eurogroup chief Jeroen Dijsselbloem will speak to the press around 1.45pm GMT. Expect a few questions about the Greek bailout (see opening post for details).
Doorstep @J_Dijsselbloem before #eurogroup today around 2:45pm
10.04am GMT
Michael Hewson of CMC Markets has also noted that Unilever's shares are still higher than before Kraft Heinz's bid became public.
That suggests City investors are expecting further action, even though Kraft Heinz has now sloped off.
While this bid appears to have fallen at the first fence it undoubtedly keeps the focus on a sector that could see further consolidation.
So Kraft does all the work for a $143 BILLION bid for Unilever, Unilever says "nah you're alright" and Kraft says "fair enough then"?
"There has been some speculation about whether the takeover offer by Kraft Heinz was motivated by the weak value of the pound but in my opinion this is unlikely to be the case. The continued buoyancy of UK equity markets is negating the effect of the dollar / pound exchange rate and is likely to keep opportunistic multinationals at bay. It is more likely that this proposed deal was motivated by a straightforward desire to consolidate and drive economies of scale.
"While UK plc is well placed to fight off unwanted takeover attention from overseas, SMEs may wish to take advantage of the exit opportunities that current market conditions are generating."
9.47am GMT
Unsurprisingly, Unilever is dragging the London stock market back this morning.
The FTSE 100 has dipped into the red, down 2 points, despite Royal Bank of Scotland surging by 6% to its highest level since the EU referendum. RBS shareholders are cheering a government plan to spare it selling off 300 branches.
9.42am GMT
Unilever isn't the only company having a bad morning in the City.
Bovis Homes, the housebuilder, has also slumped by over 7% this morning after it set aside 7m to fix problems with newly built homes.
Related: Bovis to pay 7m to compensate customers angry at poorly built homes
9.29am GMT
Unilever's CEO, Paul Polman, is known for earnest lectures about the importance of ethics and responsible capitalism, but he's proved that he can also roll his sleeves when required.
Reuters' Kate Holton explains:
Backed by Warren Buffett and the private equity firm 3G, Kraft had wanted to buy Unilever to build a global consumer goods giant but its offer was flatly rejected on Friday by the maker of Lipton tea and Dove soap.
According to people familiar with the matter, Kraft had not expected to encounter the resistance it received from Unilever Chief Executive Paul Polman, who dismissed the offer as having no financial or strategic merit.
Unilever shares tumble 8 percent after Kraft ditches bid https://t.co/nokJCXEfTi
8.58am GMT
Unilever's market capitalisation has now dropped back to 106bn, having hit a record high of 114bn on Friday.
Unilever wipes off $13 billion of market value in first 20 minutes of trading https://t.co/M2vNhGiqn4 @ReutersUK #stocks $ulvr pic.twitter.com/SYAWjwlJm9
8.48am GMT
One for City chartists out there....
Scary ghost formation, Unilever shares.
Neutral. https://t.co/7tqICkUdF3 pic.twitter.com/YAdWntan2H
8.39am GMT
Unilever's shares are now on track for their worst day in over 13 years, Reuters says.
They've slumped to around 35 per share, down from 38 on Friday evening.
Unilever shares open down 8% - but still almost 2 higher than pre-bid price
#Unilever shares down 8% after #Kraft offer withdrawn. Still up 4.5% on Thursday's close, so overall the brief episode been a net positive
8.37am GMT
Bloomberg reporter Thomas Buckley suspects Warren Buffett didn't fancy a bruising hostile takeover battle for Unilever:
Kraft Heinz pulling $143 billion bid for Unilever is in keeping w/Buffett's aversion to go hostile; first setback in a while for 3G
8.33am GMT
The political backlash against Kraft Heinz' approach for Unilever also helped to doom the bid.
Former business secretary Vince Cable let the charge. He urged prime minister Theresa May to block the approach, and deliver on her pledge to fight predatory takeovers.
#kraft bid #Unilever. Post #brexit disaster due to cheap pound. Gov must resist as we did over Pfizer bid for AstraZeneca. Theresa must act.
We expect the chief reason to drop the bid was concern about the political atmosphere in Britain, which is currently against foreigners making bids for "national treasures", even half-Dutch ones like Unilever.
8.24am GMT
George Salmon, equity analyst at Hargreaves Lansdown, reckons the bid collapsed because that Warren Buffet (Kraft Heinz's biggest shareholder) wouldn't put his hand deeper into his pocket.
Salmon says:
"After the news broke that Kraft were in the frame for a takeover on Friday, Unilever's initial reaction was frosty to say the least. However, Kraft was clearly hopeful of working towards a deal.
With the shares settling around half way between a realistic second offer price and where they traded before the news broke, the deal going through was far from a formality. However, it is still surprising to see it shelved just one business day after the initial news broke.
8.21am GMT
Why did Kraft Heinz walk away so fast?
8.07am GMT
A weekend is a long time in dealmaking.
Kraft Heinz calls it a day. Withdraws interest in @Unilever after takeover bid encounters strong resistance. pic.twitter.com/ULElEtEzlG
7.46am GMT
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"Delays in completing the review raise the risk of another bailout being needed."
Related: Kraft Heinz withdraws Unilever takeover bid
Bovis disappoints...pre-tax profit down 3% 154.7m for the FY...the #market expected flat
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