All the latest economic and financial news, as America’s finance chief comes to Europe to push for a Greek dealLatest: Greek official claims deal being drawn upSummary: US turns up the heat on EuropeJack Lew: We need to get Greece resolved fastNo more emergency liquidity for Greece todayUS fears Greece could turn to Russia 3.04pm BST Those upbeat comments from Athens also drove the German stock market higher.....This is how #German market DAX reacted to a headline from Greece pic.twitter.com/fqnbXmXkyn 2.59pm BST Curious.... Bloomberg is quoting a Greek official saying that the two sides have started drafting a staff-level agreement; basically a deal that could be approved by eurozone ministers.*GREECE, CREDITORS STARTED CRAFTING STAFF LEVEL ACCORD: OFFICIAL - what??*GREEK BANK DEPOSITS ARE SAFE, GOVT OFFICIAL SAYS*GREECE DEAL TO INCLUDE LOWER PRIMARY SURPLUSES: GOVT OFFICIAL*GREECE SAYS DISAGREEMENTS AMONG CREDITORS A PROBLEM: OFFICIALMarkets getting a boost at the moment as the latest comments regarding #Greece suggest a deal could be forthcomingAlgos see 'Greece', 'accord' and 'crafting' and have gone for it 2.44pm BST Benedict James, banking partner at global law firm Linklaters, has warned that Greece could trigger a meltdown in its banking sector if it fails to repay the IMF €1.6bn next month:“The Greek government and Greek banks are trapped in a death embrace, with the government only appearing solvent because the Greek banks agree to roll over Greek government bonds as they mature, and the Greek banks only do that because they can use the bonds as collateral with the ECB under a facility which only works as long as the Greek government looks solvent.But if the Greek government defaults to the IMF, then the ECB will probably have withdraw the current collateralised liquidity facility, whereupon the Greek banks will be very bust. This takes us into the world of the Single Resolution Mechanism which would probably involve a massive good -bank/bad-bank split, and a huge resolution of the bad banks’ assets.” 2.36pm BST Time for a recap.You have moments that come up with all too much frequency when a miscalculation could lead to the crisis that would be potentially very damaging.The notion that there is no contagion ....I think it’s a mistake to think that a failure is no consequences outside of Greece. Greek negotiating team stuck in Dusseldorf - PHOTOS - http://t.co/pYXo2Z5SDZEvery day of delay deepens the recession, destroys international trust, reduces bank deposits, hurts companies and increases job losses. 1.58pm BST Greece’s prime minister has begun holding a meeting with his top financial advisers over the bailout crisis:Ξεκίνησε η σύσκεψη στο υπουργείο Οικονομικών pic.twitter.com/91MFtUJoKAThe meeting at the MinFin has begun. Love those smiley cheekbones on #Varoufakis and #Tsipras. All is dandy! #Greece https://t.co/GDdQAEQbVO 1.56pm BST Over in Dresden, the police are out in force ready for the start of the G7 meeting of finance ministers and central bank chiefs: 1.41pm BST The Greek government has announced that the European Central Bank left the emergency liquidity limit unchanged today because Greek banks did not request any more money.That could calm fears that the ECB was playing hardball today, to drive Greece into a deal.“The ECB did not increase ELA because the Bank of Greece did not request an increase, as it was considered that the threshold of €80.2bn was adequate.”“The Brussels group work session was due to start at 2 PM. It will be delayed however because of a problem at Brussels airport which forced the plane carrying members of the Greek mission to land in Dusseldorf.The Brussels Group is important because it will handle the last things still outstanding from the agreement.” 1.34pm BST Sources in the Greek banking sector have told Reuters that savers pulled more money out of Greek banks in the last week.One said:“The past week in May was more challenging compared to the previous ones in the month, with daily outflows of 200 to 300 million euros in the last few days,” 1.24pm BST At the north of the eurozone, Finland’s new coalition government is taking shape.Former prime minister Alex Stubb has been given the job of finance minister, meaning the right-winger will be attending eurogroup meetings where Greece’s bailout is discussed.Alex Stubb is Finland's new finance minister. Timo Soini, leader of True Finns, is foreign minister.Interesting new Finnish govt has Stubb as Fin Min & Soini as For Min, might have been other way. Means no Soini v Varoufakis at #Eurogroup 12.52pm BST Here’s another sign that Alexis Tsipras is taking personal responsibility for the bailout talks:PM Alexis #Tsipras to hold meeting with Greek negotiating team at Fin Min HQ at 3 p.m. #Greece 12.47pm BST Today’s meeting between Greece and its creditors has apparently been delayed, because the Greek team has suffered transport problems:Brussels Group meeting to be delayed following Greek flight delay, local media report #GreecePHOTO Close to chaos inside terminal at @BrusselsAirport due to airspace closed (@TeleBXLActu) http://t.co/jG2NfZLwT1 pic.twitter.com/NAK1w1lQgw 12.39pm BST German bank Berenberg has published a scathing assessment of Greece’s situation today, warning that the new government has been an “unequivocal disaster”. 12.25pm BST Jack Lew has spoken with Greece’s prime minister, Alexis Tsipras, by phone, according to journalist Michail Ignatiou.Είχαμε νέο τηλεφωνική επικοινωνία του Αμερικανού υπουργού Οικονομικών και του κ. Τσίπρα. Οι Αμερικανοί ανέλαβαν τη διαπραγμάτευση; 12.17pm BST While Jack Lew was urging Greece and her creditors to treat the next deadline as the last one, Bloomberg was reporting that, well, the next deadline is about to be clattered.They say:Greece will likely miss a deadline for a deal with creditors by the end of the week as the two sides have made little progress during talks in recent days, four international officials familiar with the matter said.Greece is nowhere close to an agreement with the European Commission and International Monetary Fund over the terms of a continued bailout for the country, said the people, who asked not to be identified discussing private negotiations. German Chancellor Angela Merkel and French President Francois Hollande last week set a target to reach a deal by the end of May.Greece Likely to Miss May Deal Deadline as Talks Go Nowhere http://t.co/rp0CskJRbc 12.14pm BST Matt Klein of FT Alphaville sums up Jack Lew’s trip across the Atlantic:Once again, Americans have to step in to solve Europe's problems. 12.00pm BST Jack Lew is covering a range of other issues during his talk at the LSE, including trade negotiations, China, and cyber-security.Fortunately Observer economics editor Heather Stewart is in the audience, tweeting all the key points:US Treasury Sec underlines importance of new trade deals (eg. TTIP): insists they will boost labour laws, consumer standards. #LSEUSLew: confident Congress will pass delayed IMF reform. "Challenge is how to bring voices of emerging econs into existing frameworks." #LSEUSLew: trade deals will boost lab, enviro rules: "to level playing field...one needs to have some acceptance of these higher standards" #LSEUSAsked biggest challenges over 5-10 years, Lew singles out "cyber risks". Must "change our trusting habits" of opening attachments. #LSEUSSec Lew: weak Q1 growth in US was "somewhat anomalous": second half should be stronger. "The core strength in the economy is clear". #LSEUSRound of applause from ex-pats for grumpy questioner saying US financial regs make life tough for Americans living/banking overseas. #LSEUS 11.34am BST It’s pretty clear that Jack Lew will be banging heads together at the G7 meeting of finance ministers to get a deal on Greece.Asked if he’s optimistic that a compromise will be found, the Treasury secretary tells his audience at the LSE that he always tries to be optimistic.Brinksmanship is a dangerous thing when it only takes one accident.Everyone has to double down, and treat the next deadline as the last deadline and get this resolved.Lew: "profoundly in the interests of the US + European economies for the accident to be avoided. Brinksmanship is a dangerous thing". #lseus 11.29am BST Jack Lew repeats his warning against being complacent about the risks if Greece were to default on its loans.Greece is going to have to manage to draw up a credible plan, he says,...but I’ve told other parties there should be no sense that we know exactly what happens if Greece has a crisis.The notion that there is no contagion ....I think it’s a mistake to think that a failure is no consequences outside of Greece. We don’t know the exact scope. 11.22am BST It sounds like Jack Lew has come to Europe to knock heads together.Progress has been made, but not enough for it to be resolved. And there’s always another deadline approaching.You have moments that come up with all too much frequency when a miscalculation could lead to the crisis that would be potentially very damaging. 11.07am BST Treasury Secretary Jack Lew is issuing a call to arms to resolve the Greek crisis quickly before it blows out of control.Speaking at the LSE right now, Lew says that he’s sure that issue of Greece will come up when G7 finance ministers meet in Dresden for this week’s meeting.No-one should have a false sense of confidence that they know what the result of a crisis in Greece would be.US Treasury Sec Lew says at G7 he will be urging Europe and IMF to "treat every deadline as the last" on Greece. Fears an "accident". #LSEUS 10.49am BST Heads-up. US Treasury Secretary Jack Lew is about to begin discussing the global economy over at the London School for Economics.He’ll be setting the scene ahead of the G7 meeting in Dresden this week. There’s a livefeed here.Live webcast today from 10.45 : in Conversation with Secretary Lew #LSEUS http://t.co/xS9DFXXfOf #USpolitics #economy #LSEUS 10.15am BST News is coming in that the European Central Bank has decided to leave Greece’s emergency liquidity limit unchanged, at its current €80.2bn.#ECB said to leave Greek ELA ceiling unchangedEarly ELA announcement - an easy decision for once? Moment of truth coming soon. 9.56am BST Worried Greek savers withdrew around €300m from their accounts yesterday, more than the daily average, according to the Kathimerini newspaper.It blames worries about the IMF repayments due in June, rumours that capital controls could be imposed over the upcoming long weekend, and a suggestion that a levy could be imposed on bank withdrawals soon (this appears to be off the agenda though).Credit sector professionals reported that deposit outflows on Tuesday alone came to 300 million euros, against about 100 million euros per day in recent days.They said that while this amount is quite high, the situation is under control as citizens are remaining calm on the positive messages from Greek officials.Some 300 mln left banks on Tuesday http://t.co/vqRKWUAGT5 9.48am BST The Athens stock market gained almost 1% in early trading today as fears over Greece’s bailout talks recede, a little.Bank shares are among the biggest rises, pushing the ATG index towards the two-month high recorded last week. 9.11am BST Dresden police welcoming-committee quite enthusiastic about #G7 it seems. pic.twitter.com/9cdpjetsYx 9.04am BST Ilya Spivak of DailyFX says traders will have an eye on the G7 meeting in Dresden, which runs from today until Friday.“Greece is likely to feature prominently in the discussions, and traders will keep a close eye on headlines emerging from the sit-down for direction cues.” 8.55am BST The German public don’t appear to be spooked by the Greek crisis.“Very strong domestic demand in Germany and the low rate of inflation are fuelling economic expectations and consumers’ willingness to spend.”Die-hard optimists or just sleepyheads? German consumer confidence climbs to highest level since October 2001. 8.39am BST The Greek government has told its technical staff in Brussels to “close all issues as soon as possible but without retreating from the red lines”, the AMNA newswire reports.Those lines are Greece’s primary surplus targets (ie, how much revenues should exceed spending, stripping out debt payments), pensions, labour market reforms, and Greek VAT rates. 8.30am BST The Greek crisis is likely to dominate a meeting of finance ministers from the G7 industrialised nations in Eastern Germany, which begins tonight.“The Americans are stressing the geopolitical risks and telling us we have to find a solution, that we cannot really put the euro area and Europe at risk because of Greece.”“If Greece for some reason were to turn to Russia and Moscow would get involved more, they could get too much influence inside NATO and inside the EU when it comes to policies towards Russia.” 8.15am BST The London stock market is clawing back some of yesterday’s losses. In early trading, the FTSE 100 has risen 29 points, after tanking by over 80 yesterday.As a June deadline approaches for Athens to make its next IMF repayment, both the Greek government and its creditors are scrambling to ease fears of an imminent default and potential exit from the Eurozone. 7.49am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Yesterday’s sell off in European markets serves as a timely reminder that despite the recovery in the Spanish economy, politics has a nasty habit of reminding EU policymakers that away from their spreadsheets and flow charts of economic models, there is a human equation that adds an unpredictable element to all of their best laid plans. With a Spanish election coming in Q4 of this year and unemployment still at an eye wateringly high level above 20%, and youth unemployment still over 50% it seems highly improbable given last weekend’s results that the incumbent government will see any benefit in the main poll later this year, unless significant inroads are made to these numbers between now and polling day. Continue reading...
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