S&P cuts UK outlook from stable to negative
Greek delegation “to meet creditors in Brussels on Saturday”
EU discusses possible Greek default for first time - report
Greek state minister hopes for deal at Eurogroup meeting on Thursday
Talks between Greece and creditors to resume soon, says Juncker
Government spokesman: Germany working to keep Greece in eurozone
UK economic growth stronger than thought in Q1 and 2014
6.43pm BST
Here’s Ian Traynor’s report on the day’s Greek developments:
Greece has less than a week to strike a deal with its eurozone creditors to avoid defaulting on its massive debts and perhaps being kicked out of the single currency area, with German leaders and top EU officials now conceding that default is the likeliest outcome.
Negotiations between the leftist government in Athens and the creditors are now at their lowest ebb since Alexis Tsipras became Greek prime minister in January.
Related: Greece running out of time to avoid default, leaders concede
6.33pm BST
One last thing:
Poul Thomsen will represent IMF in Brussels meetings with Greek gov. Maybe later representatives in BG join the mission @MegaGegonota
#Greece mission headed by Dep PM will present proposal worth 0.25% of GDP to reach the 1% prim surplus target in 2015, mainly via VAT #ec
6.09pm BST
More bad news for Greece: Standard & Poor’s has cut its ratings on four Greek banks, on the basis they are likely to default in 12 months if there is no agreement between the country and its creditors. Reuters snaps:
6.00pm BST
And as Greece’s financial crisis grows, prime minister Alexis Tsipras meets...the Egyptian defence minister (?)
Meeting earlier with the Egyptian Minister of Defense, General Sobhi Sayed Sedky. #Greece pic.twitter.com/PM4WL4QhYV
5.54pm BST
Reports that EU officials had discussed a possible Greek default for the first time upset markets that were already under the cosh. Thursday’s news that the International Monetary Fund had abandoned talks set the tone for the day, and conflicting reports of various planned meetings with various officials did little to improve sentiment. So the default news just added to the gloom, and even the hope of a meeting (!) in Brussels on Saturday was not enough to rescue the day. So the closing scores showed:
5.43pm BST
And, once again, to Greece (or rather Brussels):
RT @Elbarbie Tomorrows mtng with #Greece ministers will be with an authorised representative of @JunckerEU no Brussels Group arranged yet.
5.19pm BST
Away from Greece and S&P has revised the outlook for the UK from stable to negative, while keeping the country’s credit rating at AAA. It points to the possible departure of the UK from the EU, with the forthcoming referendum:
5.11pm BST
Meanwhile, more details about tomorrow’s meeting, when senior members of the Greek cabinet will fly to Brussels with the government’s latest counter-proprosals. Helena reports that, among those who will attend the talks are deputy prime minister Yannis Dragasakis, who has oversight of the government’s economic policy, Euclid Tsakalotos, the country’s chief negotiator and Nikos Pappas, the minister of state who is Tsipras’ closest political ally.
Meanwhile Reuters is reporting:
5.06pm BST
Greek prime minister Alexis Tsipras is holding an emergency meeting of his top ministers to discuss how the country will proceed in the coming days with the ever fraught negotiations. Our correspondent Helena Smith reports:
Tsipras has convened a meeting of his political negotiation group that his core ministers are now all attending.
A non-paper issued by the government as the meeting continued attempted to allay fears that differences between Athens and its creditors are “unbridgeable.”
4.37pm BST
And more talks:
Greek Govt Official: Tsipras Spoke With EU's Juncker Over The Phone, Discussed Next Steps Of Negotiations – RTRS
4.20pm BST
Greek govt official says greek delegation to meet institutions' reps in Brussels on Saturday #Greece
4.18pm BST
Well there may not be any meeting in Athens, but Reuters is reporting a Greek government official saying there will be a meeting in Brussels on Saturday, and that Greece is ready to put forward new proposals:
4.14pm BST
No points for guessing the four worst performers in the Athex composite today. pic.twitter.com/i8eQhNlReM
4.06pm BST
Over in Athens a virulent denial has been issued by the government following earlier reports of a resumption of talks in the Greek capital by negotiators representing the Brussels Group. Our correspondent Helena Smith reports:
As reported by the country’s Athens Macedonian news agency no less, technical teams representing the EU, ECB and IMF were due to fly into the capital this evening to continue negotiations tomorrow - a huge u-turn for a government that had pledged to keep the reviled ‘troika’ out of Greece.
Now it emerges that the agency, which had cited exclusive sources to back its claim, was misinformed after government sources this afternoon rejected the story as “the product of science fiction.”
3.35pm BST
Back with the eurozone and Eurogroup head Jeroen Dijsselbloem is keen to keep the job, but wants to spend less time talking about Greece:
Dijsselbloem: Hope to be reelected as Eurogroup head so "we waste less time on #Greece & spend more on Eurozone structural reforms." (@dpa)
Don't know if @J_Dijsselbloem has noticed, but we spend rather a lot of time on Greece now, and he's already chair https://t.co/XQeSdDQVMv
If you really think about it, #Greece is developing so predictably on the basis that someone with zero leverage and no plan played for time
3.23pm BST
In the wake of the stronger US consumer figures, the Federal Reserve may well now raise rates in September and give hints of that after next weeks meeting. That is the view of James Knightley of ING Bank, who said:
The preliminary reading of the University of Michigan confidence index for June has risen nicely to 94.6 from 90.7. This is well ahead of the consensus estimate...and is stronger than every single reading in 2013 and 2014, although is lower than some of the readings seen at the start of this year, suggesting that the household sector remains in very good shape.
The bulk of the gains came from the current conditions component, which rose 6 points, but the expectations component also rose and is at levels consistent with real consumer spending growth of close to 3% year on year.
3.02pm BST
Away from Greece for a moment, and US confidence figures have come in much stronger than expected (cue talk of a US rate rise).
The University of Michigan consumer sentiment index stood at 94.6 in the preliminary reading for June.
2.51pm BST
Germans appear to be losing patience with Greece, according to a poll for TV station ZDF published today.
According to the survey 51% of Germans wanted Greece to leave the single currency, with 70% opposed to any further concessions to Athens.
2.43pm BST
The latest setbacks to Greece’s attempts to reach a deal with its creditors before the cash runs out have sent US markets lower at the open.
The Dow Jones Industrial Average is down around 100 points or 0.57%, ahead of the latest US confidence figures due shortly.
2.32pm BST
There seems to be a greater than usual weariness today with the continuing Greek drama:
Unnamed officials, people familiar with, generic sources and 3rd tier politicians. All busy crying wolf. Europe, get your act together, FFS.
Breaking: There's a new Greek headline (I won't even bother).
And it was just two weeks ago that... GREECE, CREDITORS STARTED CRAFTING STAFF LEVEL ACCORD: OFFICIAL
Arranging the production of new banknotes wouldn’t be an “easy task for a government that cannot organize a barbecue, frankly speaking,” Nielsen said in an interview on Bloomberg television on Friday. “I really don’t believe they have either the political or technical capability of starting their own currency. Money needs to be a commodity of trust, and I don’t think they have the trust in the population.”
1.56pm BST
Senior EU officials have formally discussed a possible Greek debt default for the first time, Reuters is reporting. The agency says:
The government representatives, preparing next week’s Eurogroup meeting of euro zone finance ministers, concluded at talks in Bratislava late on Thursday that there were three possible scenarios for what would happen with Greece at the end of June. The least likely, they think, is a successful cash-for-reform deal next week in time to meet end-June legal deadlines.
The second possibility was a further extension of the current bailout programme, which expires this month at the same time as Greece must repay €1.6bn to the IMF. The the third -- discussed formally for the first time at such a senior level in the EU -- was to accept Greece could default.
The Greek representative at the meeting said Athens would do everything to reach a deal in time, other officials said. That would in effect mean an agreement in time to be endorsed by the Eurogroup when it meets in Luxembourg late on June 18.
Officials said, however, that even then, disbursement of loans to Athens by June 30 would be very difficult because of the time needed to finish all the legal procedures necessary.
1.49pm BST
More meetings, this time Greek prime minister Alexis Tsipras and the Greek negotiators, it seems:
meantime, greek pm @atsipras is in meeting with negotiating team (via @leftgr) https://t.co/fzDSo7VTue
12.28pm BST
The Greek government official also described the International Monetary Fund’s abrupt departure from the Brussels talks yesterday as a pressure tactic.
12.07pm BST
Finally, the Greek government has responded to the comments made by various figures this morning. An official said Athens was ready to intensify negotiations with its creditors on a political level, and that the technical talks had already been completed (the latter appears to be at odds with what Juncker said earlier today - see 9:53). The official stressed that the government was seeking a deal that does not cross its red lines, according to Reuters.
11.54am BST
European stock markets are still down, with the FTSE 100 in London losing 0.6%, the Dax in Frankfurt down 0.1% (after earlier heavier losses) and the CAC in Paris shedding 0.35%.
Connor Campbell, financial analyst at Spreadex, has summed up this morning’s “action”:
German finance ministry spokesman Martin Jaeger claimed that his country is working to keep Greece in the euro, and stated that the idea circulating that the IMF had completely halted talks last night was false, but merely that the Washington-based institution was sending a warning to Greece, in a familiar turn of phrase, to intensify talks. These comments were echoed by Jean-Claude Juncker, and were enough to ease investors’ fears for now, leaving the region’s indices fairly flat even as confusion continues to pour out of the Eurozone about when and if members of the Brussels Group will arrive in Athens tonight to resume negotiations. The Greeks seem keen to play up their role as victim in this saga, which is contributing to the lack of clarity around what is actually going on.
The FTSE was looking slightly limper this morning, with disappointing construction output data and a disappointing performance from stocks like Shell and BP preventing the UK index from reversing the sleepy losses it has encountered as Friday rumbled on. The pound, on the other hand, managed to hit a 10 day high against the euro following comments from Angela Merkel that highlighted the difficulties the strong currency is causing for Ireland and Spain’s respective reforms.
11.37am BST
When it comes to Greece’s perilous financial state, the president of the European Council has said “There’s no more space for gambling, no more time for gambling” – but that hasn’t deterred Paddy Power, which is offering odds of 11/10 on Greece exiting the eurozone this year.
Greek finance minister Yanis Varoufakis’ job could be on the line, and he is 11/10 to be gone by year end, while it’s possible that the Greeks may need another general election this year too – priced at 2/1.
We can’t see Greece lightening up anytime soon and the same dark cloud is lingering over Yanis Varoufakis.
11.34am BST
Earlier today, Greece’s defence minister and minority party leader, Panos Kammenos, raised the stakes by saying Athens would not honour its debt repayment obligations to the IMF if a cash-for-reform deal isn’t reached this month, Helena Smith reports from Athens.
Speaking to Mega TV, the politician who also heads the government’s junior partner, the populist rightwing Independent Greeks, predicted that an agreement would have to be sealed by June 18 “or never”.
If by the end of the month a solution has not been found we will not pay the IMF. We are no longer in a position to pay interest on debt.
11.30am BST
Greece is to auction €1bn of three-month Treasury bills on Wednesday, its third sale of short-term paper this month.
In its wrangle with its eurozone and IMF creditors, Athens has demanded an increase in the amount of T-bills it can issue to deal with its cash crisis. But the European Central Bank has resisted calls by Athens to be allowed to bridge its funding gap by having banks buy more short-term government debt before international lenders release more aid.
11.24am BST
More comments from European Commission president Jean-Claude Juncker: he told a press conference that the IMF’s decision to withdraw its negotiating team from Brussels did not mean that the Fund has given up on reaching a deal with Greece. He said:
I don’t think one can interpret the International Monetary Fund’s action as meaning that the International Monetary Fund will leave the negotiations.
I spoke at length with the Greek prime minister last night and I will probably do so in the days to come... I think a solution is necessary.
11.21am BST
Meanwhile, the eurozone industrial production figures were weaker than expected, but economists noted that this was due to a big fall in energy production while other areas were stronger. They added that the figures tend to be volatile and should not cause too much concern.
The euro area’s industrial sector grew less than expected in April, eking out only modest growth of 0.1% (compared with forecasts of a 0.3% rise) after a steeper than previously thought decline of 0.4% in March, according to Eurostat.
Weak industrial production data are a reminder of the fragility of the euro area economy, but should not be a cause for excess pessimism. In fact, the data include some promising signs of life for the sustainability of the region’s recovery.
The marginal expansion in April comes as a disappointment... but one that looks better once we dive into the data. In particular, there are signs that companies are restocking and investing more in equipment such as computers, plant and machinery.
11.14am BST
The Athens official news agency is now reporting that Greek government sources denied that negotiators from the Brussels group would arrive tonight – describing the earlier report as a “figment of the imagination”. Confusion reigns...
11.07am BST
The pound has hit a ten-day high against the euro, amid worries over a Greek default and comments about the euro’s strength from Angela Merkel [see 10:29].
The euro fell 0.65% to 72.1p, its lowest level since 2 June, and is on track for its first weekly loss in three. Merkel said a “strong strong” euro would make it harder for eurozone countries to carry out reforms.
11.00am BST
The German finance ministry spokesman, Martin Jaeger, said there were no other special meetings planned on Greece, ahead of the Eurogroup next Thursday. He stressed that a deal without the involvement of the IMF was unthinkable, and declined to speculate about an extension of the second bailout programme for Greece. He added that the international institutions had shown a great deal of flexibility with Athens.
10.48am BST
A spokesman for the German government has denied that its position has changed, after tabloid Bild reported that Merkel’s government was preparing for Grexit [see 8:25]. He said Germany was working to keep Greece in the eurozone, according to Reuters.
The spokesman also said the IMF’s decision to pull its delegation out of talks in Brussels was a warning to Greece to intensify the negotiations. He added that the Fund had not broken off talks with Greece.
10.35am BST
The members of the Brussels Group will arrive in Athens tonight to continue the negotiations tomorrow, according to the Athens-Macedonian News Agency.
10.30am BST
Meanwhile, the chair of the Eurogroup of finance ministers, Jeroen Dijsselbloem, has insisted that “serious proposals” are a prerequisite for further talks with Greece.
10.29am BST
Merkel, speaking to business leaders in Berlin, also expressed understanding for low interest rates in the eurozone, suggesting they had underpinned reform efforts in countries like Spain and Portugal by preventing the euro from rising too much.
She said a strong euro “means that it is more difficult for [countries like Spain and Portugal] to reap the benefits of reforms.”
At the very least I’d like to ask for your understanding that central banks, like the European Central Bank, have to think about what to do if the inflation rate is so low and to ensure that we don’t end up in a deflationary cycle.
10.19am BST
Some comments from Angela Merkel on Greece flashing on Reuters. Speaking in Berlin, and using the same phrase as earlier this week, she said:
Where there is a will, there is a way, but the will must come from all sides.
It’s not the first time that structural reforms have to be undertaken in a eurozone country.
10.13am BST
Returning to the UK construction data [see 9:37], upward revisions to back data mean the economy grew 3.1% in 2014, rather than the prior 2.8% estimate. A 2.2% contraction in the fourth quarter of last year, for example, has been revised away to show 0.2% growth. Chris Williamson, chief economist at Markit, says:
The UK economic upturn over the past year has been stronger than previously thought after substantial data revisions show that the construction sector has not acted as such a drag on the economy. The revisions bring the economy’s performance more into line with recent survey evidence.
Our expectation is that building activity, and growth in the wider economy, will continue to revive in coming months, though the strong pound and prospect of rising interest rates will probably mean 2015 growth fails to match the impressive 3.1% expansion that the ONS now estimates was seen in 2014.
9.53am BST
EU Commission president Jean-Claude Juncker said negotiations between Greece and its creditors will resume soon, and will initially involve technocrats, then politicians. Like Dijsselbloem – who is expected to be re-elected as head of the Eurogroup according to reports – Juncker insisted that the “ball is in Greece’s court”. The comments came in an interview with radio station France Culture.
9.48am BST
The Athens stock market is still down 3.35%, after opening 4% lower, the euro has slipped and Greek bond yields have risen.
Greek 10 year yields up 25bp to 11.49 .... not a huge move by recent standards ... is a kind of modest thumbs down
9.37am BST
Britain’s economic growth was stronger than previously estimated last year and at the start of 2015, the Office for National Statistics said this morning.
Revisions to construction sector output, following changes to the way price changes and seasonal adjustments are calculated, mean that all other things being equal, GDP rose 3.1% in 2014, rather than 2.8% as previously thought.
9.30am BST
The head of the eurogroup of finance ministers, Jeroen Dijsselbloem, has refused to speculate about the likelihood of a Greek exit from the eurozone, according to reports.
But the ball is in Athens’ court, he said in an an interview with Finnish newspaper Helsingin Sanomat conducted yesterday.
If the Greek government can’t accept the fact that there are no easy solutions and that the difficult decisions just must be made, it is alone. We can’t help Greece if Greece doesn’t want to help itself.
The political decision could be made even tomorrow as long as it is credible and secures Greece’s financial independence.
9.18am BST
Stathis Kalyvas, professor of political science at Yale University, tweets:
The argument by Varoufakis that Greece needs support to begin reforming is hollow & misleading; only reforms in four months are regressive
YANIS, STAHP! STAHP! #Greece https://t.co/2m3XZDPDmC
9.14am BST
Greece’s finance minister Yanis Varoufakis denies EU claims that Athens is gambling with its future.
Contrary to stubborn rumours, we never gambled. http://t.co/CAHwnx4HoH
9.10am BST
The euro has slipped this morning, falling 0.3% to $1.122. It has been surprisingly robust against the dollar, however.
Deadlines for Athens to secure a cash-for-reforms deal with its international creditors have come and gone, but analysts believe it’s going to get harder.
It does seem like we are finally getting to crunch time now, some decisions have to be made.
8.54am BST
Should Greece remain in the eurozone? 51% of Germans now say ‘Nein’ and 41% say ‘Ja,’ according to the latest Politbarometer from German broadcaster ZDF.
At the start of the year, 55% of Germans wanted Greece to stay in the euro, while a third were against.
8.45am BST
The Athens stock exchange opened 4.1% lower... and Greek banking shares are down sharply.
Greek banks down 7.9% - again less than the 10% they rose y;day
8.39am BST
Robert Kuenzel, economist at Daiwa Capital Markets says that if no agreement is reached by the eurozone finance ministers’ meeting next Thursday, the spectre of potential Greek default and eventual Grexit could hang over the EU summit on 25-26 June .
Worrying signs on Greece mounted overnight. Negotiations with creditors remain log-jammed as Greece appears to be sticking to its position on pension reform, VAT changes and the overall pace of fiscal consolidation. Indeed, the working dinner of senior Eurogroup officials reportedly issued a 24-hour ultimatum to the Greek authorities to present suitable proposals.
Of course, it remains to be seen if this really is a hard deadline, and what the consequences might be if it were to be missed. The notion of a hard deadline has become somewhat meaningless in the Greek context. However, we believe Greece and its creditors might have only another week or so to reach a comprehensive agreement that could allow an extension of the current programme beyond June and offer the promise of fund disbursements to meet the end-June IMF payment and, more importantly, the July repayment to the ECB.
8.34am BST
Bild reports that Merkel is no longer ruling out a Greek default and exit from the eurozone, after two-hour nocturnal talks in Brussels with French president François Hollande and Tsipras earlier this week. Tsipras refused to compromise, rejecting EU demands such as higher VAT. In addition, the German chancellor is under mounting pressure from within her own party.
8.25am BST
The Dax in Frankfurt lost as much as 0.8% to 11,246 this morning, amid fears of a Greek default. German tabloid Bild reported that Angela Merkel’s government was preparing for Grexit.
8.18am BST
Angus Campbell, senior analyst at FxPro, takes a look at the euro, which has been fairly resilient:
Markets seem relatively sanguine as we end the week which has seen no progress in respect to the Greek debacle and today was supposed to mark the second repayment to the IMF of the month.
The euro continues to defy the bears holding ground against the dollar around 1.1220 this morning, 0.7235 against sterling and 138.60 against the yen. The single currency remains a focus as investors await a resolution to Greece’s quandary and debates rage over whether the existing bailout will be extended or a brand new third bailout will be proffered.
8.15am BST
European stock markets have opened lower, in a belated reaction to yesterday’s IMF walkout. The FTSE 100 in London opened nearly 30 points lower and is now down some 15 points, or 0.2%, at 6830.83. Spain’s Ibex has lost 0.5%, Germany’s Dax is down 0.4% and France’s CAC has shed 0.3%.
8.00am BST
On the data front, the guys at Accendo Markets are highlighting:
In focus today we have eurozone industrial production which is seen rebounding in April from contraction in March. In the afternoon, US producer price inflation is seen improving to inflationary territory, likely helping the dollar by buoying the case for a Fed rate hike. The University of Michigan is expected to tick back up after its dropping to a 6-month low.
7.58am BST
Mike van Dulken and Augustin Eden at Accendo Markets are calling the FTSE 100 index 25 points lower at at 6820, as markets react to the IMF walkout.
Creditor rhetoric become notably aggressive towards Greek PM Tsipras in terms of continued backtracking on ‘progress’ (EU says ‘gambling’ must stop; talk of ‘time-wasting, incompetence and deviousness’) as clock ticks towards key debt payments, the coffers run dry and default/Eurozone exit becomes distinct possibility.
7.52am BST
Tsipras did not appear too downcast when he returned to Athens from talks in Brussels last night, and headed straight to the launch party of public broadcaster ERT. There were tears (not from Tsipras as far as we know) when the state radio and television organisation aired its first broadcast in two years, after it was shut down under the government’s austerity drive. It has rehired most of the staff fired.
Tsipras had called ERT’s closure “a great wound” of his country’s bailout.
7.47am BST
Good morning, and welcome to our rolling coverage of the Greek bailout talks and other events across the world economy, the financial markets, the eurozone and business.
Despite the IMF walkout, the Greek state minister hopes Greece will clinch a deal with its international lenders at a meeting of eurozone finance ministers next Thursday.
I hope it [a deal] will come very soon, on June 18, when the Eurogroup takes place.
The announcement that IMF officials were walking away from the negotiations with Greece was as sudden as it was unexpected, as was the tone of the officials, who came across as extremely downbeat. In short the verdict was scathing, with officials citing that the gaps between the relative negotiating positions hadn’t been bridged at all.
The logjam appears to revolve around pension and labour market reform which Greece remains unwilling to compromise on, and when looking at the demonstrations that took place back in Athens yesterday it’s not hard to see why. Even if Greece does compromise on the issues the IMF wants change on, there is no guarantee that they would be able to implement them and therein lies the rub.
It would appear that each side thinks the other is bluffing with Greek officials banking that US pressure could well see the EU compromise, or that Angela Merkel won’t want to go down as the German leader who oversaw the beginnings of the break-up of the single currency.
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