The European Central Bank, as expected, kept interest rates unchanged. Attention now turns to ECB President Mario Draghi’s press conference at 2.30pm CET, where the main topic is set to be what the eurozone central bank intends to do regarding its emergency liquidity assistance to Greece, which currently stands at €89bn.
Eurozone leaders have reached an €86bn deal on a Greek bailout after all-night talks in Brussels. The timetable is for the Greek parliament to pass a slew of legislation by Wednesday, the deal will then be put to some eurozone parliaments – notably Germany’s Bundestag – and then negotiations will begin with creditor institutions over the exact size of the bailout .
After delivering a decisive No vote in Sunday’s referendum, in which voters backed Athens’ call to reject a compromise with international creditors, Greece is facing the prospect of even greater turmoil as it tries to tries to prevent the collapse of a financial system that is rapidly running out of cash.
Prime minister Alexis Tsipiras has said he is ready to resume talks immediately, while politicians and officials in the rest of the eurozone are holding a series of meetings to decide what to do next.
Key developments so far:
● Greek PM Tsipras will present fresh bailout proposals at the EU summit on Tuesday
● Greek finance minister Yanis Varoufakis quits and is replaced by Euclid Tsakalotos, previously the coordinator of negotiations with Greece’s lenders
● Markets remain relatively unruffled after No vote
● ECB governing council increases the haircut on the collateral posted by Greek banks in exchange for emergency liquidity
Global equities, the euro and German Bund yields are all sharply lower as markets react to the imposition of capital controls in Greece. Greek banks are closed this morning, triggering long queues at ATMs.
After another day of negotiations the Greek government has failed to reach an agreement with its bailout monitors – the International Monetary Fund, the European Commission and the European Central Bank – on Athens’ reform plans.
Eurozone finance ministers are going to meet again on Saturday to try and broker a deal before the Greeks’ June 30 deadline to repay €1.5bn to the IMF.
The publication of “The Second Machine Age” by Andrew McAfee and Erik Brynjolfsson last year sparked a debate over the impact of technological change on the workplace. The spread of computers, alongside the high unemployment rates experienced by many rich countries during the Great Recession, have raised fears that advanced economies may be heading for an age of mass joblessness. Capital is set to replace labour on an unprecedented scale – so the argument goes – squeezing wages while entrepreneurs and shareholders enjoy ever fatter profits. Read more
The death of Lee Kuan Yew, the founding father of modern Singapore, has focused attention on the economic miracle he helped to create.
In the three decades since Lee first became prime minister in 1959 until he stepped aside in 1990, per capita income in the city-state rose by a factor of 29, jumping from around $435 to more than $12,700. Nearby Malaysia only managed a ten-fold increase, from $230 to around $2400.
Yet economists remain divided over the causes behind this remarkable take-off.
When Zlatan Ibrahimovic was caught on camera calling France a “shitty country” as he ranted against a match official after his team Paris Saint Germain lost against Bordeaux, Marine Le Pen saw it as a shot on open goal.
Speaking to French radio on Monday, the leader of the far-right National Front minced no words in saying that “those who consider that France is a shit country can leave it”. This was a clear reference to the Swedish-born footballer, who has landed a multimillion contract in France after playing, among others, for Juventus, Inter, AC Milan and Barcelona.
Ms Le Pen was not the only one attacking the PSG star. Patrick Kanner, France’s sports minister, called the remarks “insulting” and other Socialist party members have also been critical of the striker. Still, Ms Le Pen was the one who made the most of Ibrahimovic’s immigrant status – no surprise, perhaps, for a leader who wants France to leave the EU so that it is able to pull up the drawbridge against foreigners. Read more
The eurozone is mired in a stand-off over Greece’s government debt which, at roughly 175 per cent of gross domestic product, is the highest in the currency union. But new data released on Tuesday make one wonder whether member states should stop worrying about Athens’ fiscal woes and start being concerned about… Berlin’s. Read more
Since the onset of the global financial crisis, the European Central Bank has been desperate to funnel cash into the eurozone’s financial system, in the hope this would boost investment and growth.
Yet, despite steep cuts to interest rates and several rounds of cheap loans to banks, the eurozone is still struggling to get enough investment projects off the ground. Last week, the ECB launched an ambitious programme of quantitative easing aimed at prompting banks to lend more by lowering the interest they receive on government bonds.
But what if Europe’s investment problem was not the result of a shortage of liquidity? Read more
The triumph of the anti-austerity Syriza party in Greece’s general election has put back on the table the vexed question of what to do with Athens’ debt. Economists tend to disagree over how sustainable this burden really is: some point to the sheer size of the liabilities, saying Athens will never be able to pay them back. Others emphasise the favourable conditions which the Greek government has secured on official sector loans in two rounds of restructuring: these include heavily subsidised interest rates and a lengthening of the average maturity of the debt, which now stands at 16.5 years, double Italy’s or Germany’s.
One figure on which everyone tends to agree, however, is that Greece’s public debt is 177 per cent of gross domestic product, the highest level in the eurozone. Well, everyone but a private equity group and a number of accountants, who think the relevant figure could be as low as 68 per cent. Read more
The halving of oil prices over the past six months has caught pretty much every economist by surprise and prompted a rush to explain the reasons behind this astounding drop and the consequences for the global economy.
On Wednesday, the World Bank has weighed in with a study included in one of the analytical chapters of its twice-yearly Global Economic Prospects. The Bank has good reasons to study the oil price drop: the sliding cost of crude will have profound implications for growth rates, inflation outlooks and the public finances of emerging markets, whether they are oil-producers or oil-importers. Read more
Today Germany and France will meet in their World Cup quarter final in Rio de Janeiro, the latest episode in one of Europe’s classic football rivalries. But off the pitch, a different duel is gripping the continent’s political scene: the one between Germany and Italy. Read more
For decades Italy has been dragged down by the pervasive presence of criminal organisations. But, for once, the mafia may have come to the country’s rescue. Read more
(OLIVIER MORIN/AFP/Getty Images)
Whenever any centre-left leader comes to power in Europe, there are always questions over who he or she will be compared to. Take François Hollande: only days after his election to the Elysée, commentators were already wondering whether he might be France’s Gerhard Schröder. The hope was that he could reform France’s labour market from the left, just as the former chancellor did in Germany in the early 2000s.
Matteo Renzi, who is set to become Italy’s youngest ever prime minister, is bound to draw such comparisons. When Time magazine chose to feature the then 34-year old mayor of Florence on its front page in February 2009, the US weekly asked whether he might be Italy’s Barack Obama. In an interview to the Italian daily Il Foglio, Mr Renzi compared himself to Tony Blair, saying he wanted to transform the Italian left just as Britain’s three-times prime minister did with the Labour party. The media-savvy Mr Blair certainly remembered Mr Renzi’s aspirations when he called on Europe’s leaders to “get fully behind” Italy’s new leader. Read more
It takes a little more than 15 minutes to cover the mile-long distance that separates the Bank of Italy from the ministry of the economy and finance in central Rome. But the upper echelons of the two institutions dominating the commanding heights of Italy’s economy have traditionally been closely linked by a revolving door. Read more
Beppe Grillo on the campaign trail
Two months ago Beppe Grillo came out as the big winner of Italy’s general elections. His Five Star Movement, which was created only in 2009, came within a whisker of becoming Italy’s single largest political force. His vote tally in the Lower House was an extraordinary 8.7m, more than Silvio Berlusconi’s People of Liberty party and only a few hundred thousand votes less than the centre-left Democratic Party. Read more