Technical default or new elections may be needed to break the deadlock between Greek government and its lendersGoldman: new political mandate may be requiredPolitical row over Greece’s IMF representativeBundesbank: Five minutes to midnight for Greek banksCatch-up: Tsipras criticises creditors over ‘absurd demands’ 10.17am BST This is why June is such a crunch month for Greece:Key dates for #Greece in Jun (via @MacroPolis_gr) pic.twitter.com/VDqrqxQBES #economy #politics #ec #ecb #imf #banking #markets 9.54am BST Negotiations between Greece and her creditors seem to have hit an impasse, and could trigger new elections, a referendum or capital controls on bank deposits, or even a default, warns Goldman Sachs this morning.Huw Pill, Goldman’s chief European economist, fears it will be “very challenging” for the two sides to reach a deal to unlock the final €7.2bn of Greece’s bailout aid.Facing this reality, a new political mandate and thus a new government, a referendum or new elections will be required in Greece.Not only is it possible that we may need to see sovereign technical default and/or blocked Greek bank deposits in order to come to an accommodation between Greece and its official creditors, it may be necessary to do so in order to break the current impasse in negotiations.Default, capital controls, euro referendum, new elections. All now real possibilities for Greece, says Goldman: pic.twitter.com/Wz7VdctbRxThe ongoing negotiations between Greece and its official creditors are intensely political. And forwardlooking economic rationality is not characteristic of such interactions. Not only is it possible that we may need to see technical default and deposit blocks in order to come to a new programme, it may be necessary to do so in order to break the current impasse in negotiations. 9.34am BST Back to Greece....and it appears that a major row is blowing up over the nomination of the new Greek representative at the IMF.As flagged earlier, 43 Syriza MPs and other senior party officials have signed a letter expressing strong disapproval for the selection of Elena Panaritis. “A prominent representative of bailout policies cannot represent the government...It’s not a symbolic but a political issue. It’s a wrong decision and we ask that it is taken back.”Varoufakis under pressure and it shows - PHOTOS - http://t.co/ePGE9awzPs pic.twitter.com/ZcOMrR5VE5 9.32am BST Britain’s factories grew a little faster last month. The UK manufacturing PMI edged up to 52.0, up from 51.8. 9.15am BST Heads-up. German Chancellor Angela Merkel, French President François Hollande and European Commission President Jean-Claude Juncker are meeting in Berlin today for talks about Europe’s future.Greece’s bailout talks, and David Cameron’s bid to renegotiate the UK’s links with Europe, will be on the table. Just in case there's any doubt about who makes the call on #Grexit / #Brexit - Merkel, Hollande and Juncker hold 3-way talks in Berlin today 9.06am BST It’s official: Germany and France are dragging the eurozone back.Markit’s Eurozone Manufacturing PMI, just released, came in at 52.2. That matches March’s figure (which was a 10-month high), but is below the flash estimate of 52.3 two weeks ago.“The rate of growth is modest rather than spectacular, however, and there are clearly countries which continue to struggle. Weakness is centred in the region’s core, with France’s manufacturing sector still in decline and Germany only seeing very meagre growth. “On the other hand, Spain and Italy appear to be staging strong recoveries, benefitting in particular from impressive export performances. Such export gains point to improved competitiveness which bodes well for longer-term economic prospects. Manufacturers in France and Germany need to be mindful of such competition.” 8.59am BST In contrast with Italy and Spain manufacturing in Germany is struggling according to the Markit #PMI https://t.co/bhTDLcZcNE 8.56am BST Germany’s factory growth slowed last month, and by more than expected:*GERMANY MAY MANUFACTURING PMI FALLS TO 51.1; PRELIM. 51.4 8.54am BST France’s factory sector is still shrinking. Markit’s French manufacturing PMI rose to 49.4, up from 48.0 in April -- the best reading in a year, but still below the 50-point mark showing no-change. 8.50am BST Boom! Italy’s manufacturing sector has reported its biggest jump in output in four years.Factories saw a sharp increase in output and new orders in May, leading to a rise in hiring. That pushed Markit’s Italy manufacturing PMI up to 54.8 from 53.8 in April -- which is the highest reading since April 2011.“Italy’s manufacturing sector is enjoying its best quarter of expansion since 2011. Output growth has accelerated in every month this year so far, and a further strong increase in new orders suggests production is set to remain on an upward trend throughout the summer. 8.46am BST Dutch factories enjoyed a good May (like their counterparts in Spain) with the sector growing at its fastest rate since December 2013.NEVI #Netherlands Mfg #PMI rises to 17-month of 55.5 (April: 54.2) high as Dutch mfg sector strengthens further http://t.co/6W2qrz90V6 8.43am BST The euro is weakening this morning, as concerns over Greece weigh on the market.The single currency has dropped by 0.7% against the US dollar, from $1.0987 to $1.091. 8.22am BST The recovery in Spain’s factory sector continued last month, with output growing at the fastest rate since April 2007.Markit’s Spanish manufacturing PMI jumped to 55.8 in May from 54.2 in April, showing “a sharp improvement in business conditions”. 8.16am BST Italy’s prime minister, the reformist Matteo Renzi, has been given a wake-up call by disgruntled voters.Renzi’s centre-left Democratic party performed worse than expected in regional elections last weekend, as populist and anti-establishment parties enjoyed a rise in support. It lost the governorship of Liguria, which is usually a left-wing stronghold, and was pushed hard in other districts.Italian Government received a slap from the electorate as the Northern League and 5* movements did well. Related: Silvio Berlusconi mistakenly arrives at leftist party rally in Italy local elections 8.01am BST China’s stock market has surged this morning, following the news that its factory sector had contracted for the third month running.Traders piled into stocks in Shanghai, giving the main index its biggest one-day gain since January. #China | *SHANGHAI COMPOSITE INDEX RISES 3.4%, BIGGEST GAIN SINCE JAN. 21 ...need worserer data pic.twitter.com/YIMZJyBFpE 7.52am BST A top official at Germany’s Bundesbank has warned that Greek banks are on the brink of crisis.Andreas Dombret, an executive board member of the German central bank, told Germany’s Bild newspaper that the Athens government must move swiftly to reach agreement with creditors:“The Greek government would be well advised to act quickly - for the Greek banks, it is five minutes to midnight.”“The situation in Greece is very critical and bank customers see that naturally...The direct dangers for European banks are relatively small.”Bundesbank's Dombret says It’s Five to Midnight for Greek Banks in interview w/ @BILD as deposits drop like a stone. pic.twitter.com/rXHAoMAmYb 7.49am BST Greece may have invented democracy, but it still has a bit to learn about diplomacy. Related: Tsipras lambasts 'absurd proposals' of creditors for Greece debt-deal failure “The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance.It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”....the beginning of the end for the European unification project by shifting the Eurozone from a monetary union to an exchange rate zone, [and] also triggers economic and political uncertainty, which is likely to entirely transform the economic and political balances throughout the West. Related: Tsipras lambasts 'absurd proposals' of creditors for Greece debt-deal failure #Greece's creditors long hoped @atsipras swoops into bailout talks to save deal. Not sure how he can after this op-ed http://t.co/KtChpba5xXPerhaps the closest to a "this is it, take it or Grexit" public statement by Tsipras: http://t.co/RmXjUwILHH 7.38am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.The clock is ticking louder for Greece, as Athens and its creditors continue to struggle to agree a deal before its bailout expires at the end of the month. Rumours of my impending resignation are (for the umpteenth time) grossly premature...@nikimoza1 "In the long run we are all dead." J.M.Keynes. (In the medium run, those nostalgic of the troika days are stuck with me @ FinMin) Continue reading...
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