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Meeting in Brussels ends in agreement at 2am after IMF waters down its demands to placate Germany and payment is split into two tranches
Greece’s ‘breakthrough’ debt deal – business live
European officials have agreed to unlock €10.3bn in bailout money for Greece as the International Monetary Fund made a significant climbdown in its demand for upfront debt relief for the recession-hit country.
Greece’s international creditors emerged from an 11-hour meeting in Brussels at 2am on Wednesday having agreed on steps to ease the burden of Greece’s €321bn (£245bn) debt mountain, worth 180% of annual economic output.
Related: Eurozone unlocks €10.3bn bailout loan for Greece
Related: Greece pushes fresh austerity drive through parliament
Related: The Greek bailout shows the EU is on its best behaviour – until 24 June | Jonathan Freedland
After a marathon meeting, the Eurogroup has agreed to extend bailout loans to Greece… and the IMF are on board too.
Closing summary: Major breakthrough hailedDijsselbloem: IMF are on board
IMF: Agreement that Greece’s debts are unsustainable Meeting finally over – highlights start hereRead the deal here
Eurozone ministers are finally heading to their beds, and the frazzled Brussels press pack are heroically filing copy.
So let’s have a brief recap.
“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme,….This is stretching what I thought would have been possible not so long ago.”
We welcome that all stakeholders recognise that Greek debt is unsustainable. We welcome that it is understood that Greece needs debt relief to make it sustainable.
It’s late, but Bruno’s brain is still whirring.
Pretty clear eurozone debt measures & revised post-2018 targets have been privately quantified for IMF, not for (German) public consumption
Greek finance chief Tsakalotos added:
“I think there is some ground for optimism that this can be the beginning of turning Greece’s vicious circle of recession-measures-recession into one where investors have a clear runway to invest in Greece.
Down the corridor, Greek finance minister Euclid Tsakalotos has told reporters that today’s deal is an ‘important moment’ (echoing Dijsselbloem, Thomsen and Moscovici)
Greek fin min @tsakalotos says this is an important moment for #Greece after long time and time for some optimism #Eurogroup
Donald Tusk, president of the European Council, has hailed the agreement – which comes as world leaders head to Japan for a G7 meeting.
I welcome Eurogroup agreement on Greece. Strong message of stability for Greece, Europe and the global economy. #G7
And finally…. Jeroen Dijsselbloem insists that the eurozone would not ‘go it alone’ without the International Monetary Fund.
If, hypothetically speaking, the Fund found it couldn’t back the package then the two sides would work together to find a solution, he says, promising that:
We will stay in close co-operation with the IMF.
IMF seems on a promise (not admitted by @J_Dijsselbloem ]) that ESM will buy out its €14.6bn loans early, hence ‘standard criteria’
Bruno Waterfield of the Times is concerned that the measures agreed tonight aren’t actually quantified. Why not?
Poul Thomsen says Europe can deliver the measures which the IMF has been calling for. He agreed that they need to be quantified, before the Fund can come on board.
Q: When will the eurozone decide the details of medium-term debt relief? Not until after the German elections?
Dijsselbloem claims he doesn’t know when those elections are! (I think they could be in August 2017, or later).
Q: Today’s debt relief measures seem weaker than what the IMF has been proposing, so is there a danger that it fails your debt sustainability test?
Poul Thomsen says the IMF will assess the latest proposals (online here) and see if they go far enough.
Q: What has to happen before Greece receives its bailout funds?
Now the IMF’s European chief, Poul Thomsen, speaks!
We welcome that all stakeholders recognise that Greek debt is unsustainable. We welcome that it is understood that Greece needs debt relief to make it sustainable.
And we welcome that there is agreement on the methodology and the objectives of what debt relief will achieve.
Onto the details….
The boss of the ESM bailout fund, Klaus Regling, says Greece needs to complete the outstanding ‘prior actions’ previously agreed with its lenders.
European Commissioner Pierre Moscovici says the eurogroup has reached a good agreement.
It opens the way to rebuild confidence and create a “lasting economic recovery in Greece”.
It is a very important moment in this long and sometimes difficult journey”
Curious metaphor alert, from the Slovakian finance minister:
It was a complicated birth tonight. It’s probably about as good as it gets. #Greece #Eurogroup #eurozone #IMF
The Eurogroup’s statement is online here:
The key points:
We achieved a major breakthrough on #Greece which enables us to enter a new phase in the Greek financial assistance programme #eurogroup
We welcome intention of #imf management to recommend to Fund’s board to approve a financial arrangement before end 2016 #eurogroup #Greece
Dijsselbloem sounds quite cheerful, telling reporters that this is an important moment in the long Greek saga.
Confidence has begun to recover since the drama of last summer, and he extends his thanks to Greek finance minister Euclid Tsakalotos and his staff.
In another important development, Dijsselbloem says that that IMF is on board with the Greek bailout.
He explains that the Fund’s management have agreed to recommend a new financial arrangement for Athens before the end of this year.
#IMF will recommend its board to stay in programme before the end of the year
Eurogroup president Dijsselbloem says ministers have agreed a range of debt relief measures for Greece.
In the short term, these relate to ‘debt management’ – smoothing Greece’s repayments to avoid any shocks.
This decision eases concerns that Greece could default over the summer.
However, most of this new loan will be returned to Greece’s creditors, of course, or used to cover outstanding government bills.
ESM will endorse disbursement of 10.7 mn euro – in installments (much of which Greece will send straight back in forms of arrears/loans)
It’s official! Jeroen Dijsselbloem confirms that the eurozone’s bailout vehicle has agreed to extend €10.3bn of bailout loans to Greece.
But as rumoured earlier, the aid will be handed over in several instalments, not in one lump.
This is very good news… the programme is fully back on track. Greece is delivering a lot, and we are making good progress.
#Eurogroup Dijsselbloem: ESM will be able to endorse the disbursement of 10.3bn #euros, pending national approvals.
Jeroen Dijsselboem has arrived at the press conference, rubbing his hands.
And excitingly, IMF chief Poul Thomsen is there too.
Thats a first! Poul Thompsen at the briefing pic.twitter.com/sUv5hse0wA
Eurogroup president Jeroen Dijsselbloem is about to hold a press conference about the meeting.
It’s being streamed live, here (right-click to open in a new tab)
AFP are now reporting that the eurogroup has done enough to unlock its long-awaited bailout funds:
#BREAKING – Eurozone reaches deal on Greek 10.3 bn euro bailout payment: source @AFP. France’s Sapin says ‘deal’ but no detail
Michel Sapin has also declared that the IMF is part of this deal with Greece, which covers short, medium and long-term debt relief (Reuters reports)
Sapin seems very happy and upbeat..seems like this one won’t be another kicking the can down the road deal
French FinMin Sapin: Agreement Treats All Points Discussed On Greece — BBG
French finance minister Michel Sapin says a deal has been struck with Greece, according to a newsflash on Reuters.
It’s official, the eurogroup meeting had concluded!
And there are reports that an agreement has been reached between the eurozone and the IMF on Greek debt relief, and reforms.
#eurogroup over. @J_Dijsselbloem presser imminent.
Remember that Zorba the Greek tune we mentioned earlier? Apparently it was played to the eurogroup!
Scoop: During Eurogroup a finance minister played the syrtaki tune out loud.Ministers getting in the full #Greek mood.
Hang in there…. the latest word is that the meeting might *finally* be over.
#Eurogroup is over
But the Greeks say it’s over, damn it! pic.twitter.com/ufu9k2OWqD
Current state of play:
The clocks have now chimed 1am in Brussels, and the eurogroup meeting still grinds on.
We’re expecting a press conference at some stage, meaning ministers won’t get much sleep before they return for fresh meetings on Wednesday morning….
Dijsselbloem is supposed to give a doorstep for #EcoFin at 8:45am. It may coincide with the #Eurogroup presser after all.
Is it an IMF-Germany match? “Yes, with a lot of time-outs”, a source tells me. #Eurogroup.
The IMF’s top man in Europe, Poul Thomsen, is reportedly consulting with Christine Lagarde over the Greek issue….
Another break apparently. This time for P. Thomsen to call @Lagarde
Sounds like Greece’s creditors are still divided…
#Eurogroup still going on. “difficult with the IMF” says a source
Oh goodness me…. AFP’s Alex Pigman has heard the eurogroup ministers haven’t reached an agreement after all….
Understand that ministers now working on a new version of the text. This could still be a while. #Eurogroup
Just a reminder – Ecofin doorsteps from 7am #eurogroup #purgatory pic.twitter.com/iv2gvW5wR2
Euronews have produced a handy explanation to the Greek debt crisis – which you can see here.
It includes clips of the anti-austerity protests which gripped Brussels today (as covered earlier today), and saw riot police use water cannons on demonstrators.
Seen on @euronews: The Brief from Brussels: Greek debt still divides the eurozone https://t.co/IXlM9fdnWV pic.twitter.com/XujiMb5V2P
It’s now Wednesday in Brussels, and 1am over in Greece, and still the eurogroup meeting continues.
More seriously, my local pub just rang ‘time at the bar’ 🙁
Back in the #Eurogroup table. Brake over.
Heads-up! Eric Maurice of EUobserver reckons eurozone finance ministers might wrap things up in 20 minutes….
I hear #Eurogroup now expected to finish around midnight.
Bong! It’s now eight hours since eurozone finance ministers began today’s meeting, and just 30 minutes until the Brussels bells chime midnight.
So far, it sounds like they may agree to hand Greece its €11bn aid tranche, but in two installments.
Alex White of the Economist Intelligence Unit suspects tough decisions on Greek debt relief could be delayed until after the next German general elections, in autumn 2017.
#Greece Looks like we will get sufficient disbursement in June, real surplus / debt restructuring debate deferred until after DE elections
#Eurogroup still on break. Thats usually a good sign that things could be moving. #Greece
OK, I have no idea what this means….but EC spokesman Simon O’Connor just tweeted this catchy tune from Zorba the Greek.
Finland’s finance minister has just tweeted that the eurogroup has taken a break, and that these long days require ‘endurance’:
Euroryhmän neuvotteluissa tauko. Nämä pitkät päivät vaativat kestävyyttä. Onneksi sitä tulee harrastettua. Jaksaa paremmin.
The Wall Street Journal have a great timeline showing Greece’s debt repayments:
Splitting Greece’s bailout funds into two tranches would leave Athens’ a little more exposed over the summer.
It has to repay around €3bn of long-term debt to its creditors in July, which should be manageable if it receives €7.5bn in loans next month (as is rumoured).
Here’s Reuters’ latest report from Brussels, confirming what we’ve been hearing:
Euro zone finance ministers are likely to approve new loans to Greece of 10.3 billion euros, according to a draft statement seen by euro zone officials.
The 10.3 billion euros in new loans is likely to be paid out in two tranches, officials said, with the first one in June worth 7.8 billion euros. The amount and timing are not final yet, officials said.
Our own Jennifer Rankin confirms that Greece may get its aid loans in two portions, not all in one lump as expected:
She’s also hearing that negotiations over debt relief for Athens are continuing…
Smoke signals from the #eurogroup: #Greece likely to get 7.5bn in June and 2.8bn in September in bailout payments.
Talks continue on debt roadmap: short, med and long term debt relief. Measures going back and forth among each, source. #eurogroup #greece
A Slovak government advisor tweets that eurogroup ministers are taking a break.
this is something we all love …The Waiting :)) #Eurogroup on break. #Greece #eurozone #IMF pic.twitter.com/7BnmJs8Imy
A few journalists in Brussels are reporting that Greece’s bailout payment is going to be split into two instalments.
Efi Koutsokosta of Euronews has the details:
Greek gov srcs: the bailout tranche of 10,3 bn euros will be given in 2 sub tranches (7,5 bn in June, 2,8 bn in Autumn) #Greece #Eurogroup
Over in New York, Wall Street has just closed for the night with gains across the board.
Banks and tech stocks led the rally, as investors appeared to stop worrying about the prospect of a US rate rise.
Today’s problem in a nutshell:
#Greece #euro group ongoing as Schaeuble tries to square the circle of disbursing with the #IMF onboard while not giving any debt relief now
Rumblings of discontent in Brussels….
I hear that three #Eurogroup ministers are furious that Tsipras changed EKAS social benefit scheme without Institutions’ consent.
Break (long in duration) at #Eurogroup for further talks on #Greece acc to @NikosSverkos https://t.co/6vBmJ7VBpQ
Greek government bonds traded at a six-month high today.
That’s thanks to hopes that Athens would receive the bailout funds needed to avoid another financial crisis.
“The fall in Greek bond yields reflects optimism that the reforms passed by the Greek parliament pave the way for support from the Eurogroup later today….
If there is debt relief, you will see further outperformance.”
The Eurogroup meeting is now entering its seventh hour.
Greek journalist Yannis Karagiorgas sums up the mood:
#Eurogroup Waiting…Waiting… pic.twitter.com/0USR3QifuL
Here’s our latest news story from Brussels:
Related: Eurozone officials hope to give Greece next tranche of bailout
European officials have voiced optimism that Greece could unlock the next tranche of bailout money even as an ongoing row between the country’s creditors threatens to plunge the eurozone back into crisis.
Greece’s international creditors remain deadlocked over how to reduce the recession-hit country’s €321bn (£245bn) debt mountain, worth 180% of annual economic output.
The Greek delegation are briefing reporters in Brussels now, and confirming that talks are continuing.
They’re also suggesting that Germany is pushing for changes to the austerity measures passed last Sunday.
#Greek govt officials say they remain optimistic that there will be an agreement tonight #Eurogroup
#IMF firm on its views on #debt while #Germany asks changes from #Greece on legislations that have already been voted, acc to Gr govt off
Eleni Varvitsiotis, EU correspondent at Greek newspaper Kathimerini, says three outstanding issues must be resolved before Greece gets its aid tranche:
3 items have to b finalised for disbursement.A.Speeding up privitizations(old airport)b. Pension reform,smoothening EKAS c. Changes on NPL’s
Matthew Klein, one of FT’s Alphaville’s many blindingly-bright sparks, has been digging through Greece’s finances, and spotted something rather interesting.
It’s all to do with Greece’s net debt (basically its gross debt minus the financial assets the country holds).
This is a real puzzle and no one seems to have a good explanation for it
Greece’s ANA newswire are reporting that eurozone finance ministers are likely to approve Greece’s €11bn bailout tranche tonight.
Here’s the story, hot off the Reuters terminal:
Negotiations at Tuesday’s Eurogroup meeting are focusing on Greece’s debt, a source from the European Commission said, adding that Eurozone’s finance ministers are expected to approve the disbursement of the loan installment totaling 10.3 billion euros.
The same source said there are still some pending issues which will be included in the final statement. Commenting on these issues, a government source said they are not decisive and will be resolved summarily.
On the issue of the country’s debt, the distance between the IMF and Germany is still great and the aim is to achieve greater convergence today. The Commission source said that after pressure by the IMF, the weight has shifted towards measures that will be taken in the short term. However, Eurozone officials hope some deal will eventually be achieved with the IMF tonight, as there’s political pressure to avoid reviving the crisis.
Let’s fill the time with some dispiriting Greek charts, via Open Europe analyst Raoul Ruparel:
IMF forecasting #Greece double digit unemployment 4 decades, worth remembering rarely had single digit unemployment pic.twitter.com/AvNOOds484
Safe to say the IMF has tempered its expectations of privatisation revenue in #Greece (rightly so) pic.twitter.com/FNamIxPCCA
Brussels correspondent Jennifer Rankin says there’s no sign when the talks about Greece’s bailout, and other eurozone economic issues, will end.
Eurozone meeting on Greece goes on, no one ready to say yet when it will end. https://t.co/LEsMHSpbcW
Greece’s former top central banker fears that the country is ill-prepared to exit its economic crisis.
Our Athens correspondent, Helena Smith, explains:
Former gov of Bank of #Greece Giorgos Provopoulos says he does not c “light at end of the tunnel” cos gov lacks “business plan” as#EG meets
Whatever is agreed at 2night’s eurogoup will be politically expedient. Big Q is whether there can b recovery with such fundamentals?
While we wait for progress at the Eurogroup, here are some more photos from today’s meeting.
One of last-minute obstacles 4 review conclusion relates to #Greece PM announcement re creation of solidarity fund, acc to MNI (via @skaigr)
More optimism the Eurogroup’s talks will be constructive:
There are pending issues re 18 prior actions but not big enough to block disbursement, acc to official (via @capitalgr) #Eurogroup #Greece
Stock markets appear to have come to terms with the prospect of a US interest rate rise, perhaps as early as next month. Indeed, the idea of the Federal Reserve hiking rates put financial shares in the spotlight, on the basis that dearer borrowing costs could boost their balance sheets.
Meanwhile there was also optimism that a deal between Greece and its creditors could finally be reached at the Eurogroup meeting, despite tensions with the IMF over the country’s debt situation, thus releasing much needed bailout funds.
It’s been nothing short of a stellar day for the FTSE-100 as the market has shaken off earlier woes to forge a path higher, despite what could be construed as a raft of adversity. Public sector borrowing was higher than expected and Bank of England officials painted another gloomy picture over the economic outlook in their parliamentary appearance. The saving grace however appears to have been a combination of that latest Brexit survey data showing the Remain camp forging its way ahead, plus the fact that oil prices are evidently ascending, too.
Schaeuble looking surprisingly happy… pic.twitter.com/U2G5RbDWXS
Here’s AP’s summary of the comments ahead of the Eurogroup meeting on Greece:
The eurozone’s top official expressed optimism Tuesday that Greece’s creditors will approve its reform efforts, paving the way for the payout of a new batch of rescue loans that would keep Athens from defaulting on its massive debts this summer.
“I hope that there is full agreement between the institutions, that we can move on in the program,” said Jeroen Dijsselbloem, the head of the eurogroup of finance ministers, as he arrived for the talks in Brussels.
The next step for creditors would be to find a way to lighten the country’s debt load, which mainly consists of past rescue loans from eurozone states. Greece’s debt is predicted to reach more than €333bn this year, around 180% of its annual economic output.
“Greece needs room to breathe, it needs certainty. It’s made considerable efforts, and again this weekend,” said French Finance Minister Michel Sapin, referring to the reforms Greece passed.
US investors have followed their European counterparts and moved back into the stock market, with continuing talk about an imminent Federal Reserve rate rise helping to lift financial stocks.
The Dow Jones Industrial Average is currently up 187 points or just over 1%, while the S&P 500 has added 0.7% and Nasdaq is 0.85% better.
Back with Mark Carney, and here’s our report on the Bank of England governor’s appearance at the Treasury select committee:
Related: Bank of England governor rejects accusations of bias over EU referendum
More comments made ahead of the Eurogroup meeting which should now be well underway:
Michael Noonan of Ireland is expecting agreement on disbursement for #Greece today, plus detailed discussion on debt relief roadmap.
Greek bailout without IMF ‘not an option,’ says Dijsselbloem https://t.co/H9gHXAFsSI pic.twitter.com/tsCi8BCUMr
The International Monetary Fund is using its negotiating position to try and persuade the Eurogroup to make concessions in the Greek debt crisis, says the Centre for Economics and Business Research, and this may be its best chance to push its point of view.
But Cebr economist Danae Kyriakopoulou said:
Cebr warns against premature optimism that today’s meeting will mark ‘the end of the Eurozone crisis’. IMF policy is determined by its shareholders (represented by the board), rather than its staff. Politics matter much more to the former. And there is little enthusiasm in Germany for debt relief which would be hard to sell to the country’s voters.
On the other hand the Eurogroup will be unwilling to risk a crisis that could break up the Euro in the run-up to the UK Brexit vote on 23 June and the Spanish elections on 26 June, so arguably today’s meeting is the IMF’s best chance to use its negotiating power to force the concessions it believes are necessary.
1. The IMF backs off and avoids confrontation with the Europeans. This would continue the “extend and pretend” strategy that has governed the Greek crisis since it started. This would most certainly be bad for the Greek economy, as the IMF staff’s projections show. And, it could prove very damaging to Europe as it raises the likelihood of a default and Grexit further down the line – meaning that debt owed to European taxpayers (including in the UK) would never be repaid.
2. The IMF plays hardball and poses a painful dilemma to the Europeans. This would certainly be risky. A failure to agree could lead to another Eurozone crisis, possibly a Grexit. But it is in everyone’s interest that this is avoided. The debt relief itself need not take the form of an outright haircut. Some form of reprofiling, as outlined in the IMF’s DSA could do the trick. This would put the Greek economy on a more sustainable trajectory but would be costly politically to Eurozone leaders and may lead to political instability in the already-troubled union.
Germany’s finance minister, Wolfgang Schäuble, has just put his finger on the problems over the Greek bailout.
Arriving for today’s meeting, Schäuble told reporters that there can be “no programme” for Greece without the IMF.
More Schaeuble: “We have no quarrel with the IMF” #Greece #Eurogroup
Back at the eurogroup, European Commission chief Jean-Claude Juncker has revealed that all isn’t well:
Journalist: “All good?” @JunckerEU : “No.” pic.twitter.com/qWVydMwA58
#Eurogroup Van Overtveldt says it’s strange tht #IMF asks for unconditional debt relief, we always maintained that relief comes w conditions
Here’s why Belgium’s workers took to the streets today, from AFP:
“I am here to protest against all the measures that this right-wing government is taking. They are attacking workers, pensioners and the unemployed,” Michel Beis, a trade union member taking part in the peaceful rally told AFP before the violence broke out.
“We are going backwards,” added Jacques Warnier, a protester from the town of Liege.
The AFP newswire are tweeting photos from today’s clashes in Brussels:
La police fait usage de canons à eau lors d’incidents en marge de la manifestation de Bruxelles #AFP pic.twitter.com/Q4iUY1ES84
La police continue à refouler les manifestants à Bruxelles #AFP pic.twitter.com/nxpFDgoNWI
Belgian police fired water-cannon during clashes with protesters at a huge demonstration in Brussels on Tuesday against the centre-right government’s austerity measures, AFP journalists said.
A group of around 100 masked protesters broke away from the peaceful main rally of around 60,000 people in the Belgian capital and started hurling objects and firecrackers at riot police, they said.
Clashes are breaking out in the Belgium capital, as an anti-austerity demonstration turns violent.
Local media are reporting that riot police are using water cannon on protesters; just as eurozone finance ministers meet to discuss Greece’s bailout.
Meanwhile in Brussels, eurozone finance ministers have been gathering for today’s Eurogroup meeting.
As explained back in the introduction, we had expected ministers to sign off on a €11bn bailout payment for Greece.
I’m afraid we will spend the night together. #Greece #Eurogroup #eurozone #IMF
This #Eurogroup is not going to be an easy one. Many things remain unresolved. #eurozone #Greece
Most important thing is to conclude review & agree tranche – give #Greece breathing space. We don’t need another liquidity crisis. #eurozone
We believe that debt-relief talks & financial participation of International Monetary Fund can wait for later stage. #IMF #Greece #eurozone
Cambridge lecturer Finbarr Livesey has helpfully tweeted the timings of the best moments of today’s hearing:
Carney reacts to qns of political involvement and influence of Goldman Sachs at 10:35 and 11:41 in Treasury Cmmt https://t.co/Fo4elKkFqG
Here’s some reaction to Mark Carney’s appearance at parliament today, from Calum Bennie, savings expert at Scottish Friendly:
“Today’s grilling of Mark Carney by the Treasury Select Committee has only helped fuel the speculation on the impact a Brexit would have on the UK economy.
“The build-up to the EU referendum appears to be having a significant impact on the economy as sterling has been incredibly volatile, while GDP and inflation have slowed are slowing.
That was a livelier morning than expected. Here’s a quick recap.
By our actions, and comments, we have made it more likely that we’ll bring inflation back to target, whatever the outcome of the referendum, sooner and more sustainably.
It’s important not just for those in financial markets to understand that, but it’s important also to (be) straight with the British people about that.
Rees-Mogg displaying dignity of a losing manager who claims referee is biased by accusing Carney of “supporting one side in the campaign”.
Carney asked if Goldman Sachs leaned on him over #Brexit: “I categorically refute that and am stunned.”
Today’s @ONS stats show public borrowing at £76.0bn in 2015/16 – down£15.7bn on 2014/15. Our spokesperson response: pic.twitter.com/2k5eRIrB3N
Andrew Tyrie has returned from his little chin-wag with Jacob Rees-Mogg, to wrap up the session.
He thanks Martin Weale for his work at the Bank of England, as this could be his final appearance before the committee. Tyrie cites Weale’s “independence of mind” (which included several lonely, hawkish votes to raise interest rates).
We’re very grateful for your public service, and we hope it’s not the last.
Back in the committee room, Scottish Nationalist MP George Kerevan asks about the Banks medium-term view of the UK economy.
Mark Carney says that growth has slowed from the high days of 2013, when GDP was expanding by around 3% per year.
Get a sponge and a towel, folks — here’s the moment when the gloves came off between Mark Carney and Jacob Rees-Mogg.
Watch the moment Mark Carney clashed with #Brexit campaigner Jacob Rees-Mogg over neutrality https://t.co/Udkxg3F0oC https://t.co/6f3cLqUHLm
Mark Carney displayed flashes of anger at his chief pro-Brexit tormentor on Parliament’s Treasury Committee in his most robust defense yet of the Bank of England’s comments on the European Union vote.
It “may be inconvenient, but by our actions, and comments, we have made it more likely that we’ll bring inflation back to target, whatever the outcome of the referendum, sooner and more sustainably,” the governor told Jacob Rees-Mogg, the lawmaker who called this month for him to be fired. “That’s our contribution to a better economic outcome for the British people, and for you to suggest otherwise is to try and undermine that.”
The committee turns to the issue of Britain’s current account deficit.
Mark Carney says there would be a ‘necessary’ rebalancing of sterling (a fall, basically), if Britain chose to leave the EU.
Today’s Telegraph cartoon will amuse those who take government Brexit warnings with lashings of salt.
The committee then turn to the weapons available to the Bank to stimulate the economy.
MPC member Gertjan Vleighe says he believes another round of quantitative easing (buying bonds from banks with newly created money) would still be effective. And there is still room to cut bank rate.
Steve Baker MP then leaves Mark Carney briefly speechless, by asking him to refute the suggestion that Goldman Sachs have pushed him into the Brexit debate.
Baker tells the Bank governor that he is asking ‘in the spirit of goodwill’ (!!)….
We know that Goldman Sachs has been a donor to the Remain campaign, you are a former managing director of Goldman Sachs.
Can I just give you the opportunity to refute any suggestion that Goldman Sachs may have put pressure on you to take a view?
Yes, I refute it categorically… and am stunned to ever have it raised.
.@SteveBakerHW “Can I give you the opportunity to refute claim Goldman Sachs put pressure on you?”
Mark Carney: “Wow. I am stunned.”
Q: Why do the Bank’s latest graphs show uncertainty over UK assets falling, just as the EU referendum reaches its height, asks Steve Baker.
Policymaker Martin Weale suggests that it is tracking the support for the Remain campaign.
Steve Baker then turns to the Bank’s [not unblemished] track record on forecasting
You said that interest rates might rise when unemployment fell to 7%, but they didn’t. Then you said they might rise once real wages went up, but they didn’t. Then you suggested rate could go up at the turn of 2016. They didn’t. So….
That’s pizza analogy – cant predict what you will weigh in a year or 20 years..CAn predict if you eat a pizza every hour -fatter than if not
Steve Baker MP goes next, and reduces Mark Carney to giggles.
Baker, another pro-Brexit MP, tells the Bank of England’s top brass that he positively rejects the idea that they are wicked conspirators.
I choose to believe your wholesale innocence, completely unsullied by the grubby politics of this referendum matter. As it happens I think you’re just wrong….
During a long discussion on sterling, Ben Broadbent suggests that the pound could fall by 5% if Britain votes to leave the EU.
23% of undecideds trust Mark, only 1% trust George! #EUref : Carney doubles down on Brexit recession risk warning https://t.co/xni2Vns8uV
Ben Chu of the Independent says that Mark Carney has “doubled down” on his concerns over the EU referendum this morning.
And that could be significant, as opinion polls have found that the public trust the Bank of England governor more than Westminster’s best and brightest.
The Governor of the Bank of England, one of the most trusted public figures in the UK, has sounded another warning about the instant economic shock Brexit would inflict on Britain.
Speaking in front of MPs on the Treasury Select Committee, Mark Carney, who recent polling suggested is more trusted among the public than senior politicians, said: “Brexit to my mind would have a material impact on growth and inflation. It would be likely to have a negative impact in the short term.”
Carney doubles down on Brexit recession risk warning in front of MPs https://t.co/Hv8LioPJdl
Asked about recent movements in the pound, Mark Carney says sterling has been tracking the probability of Britain leaving the EU (rising when Brexit looks less likely).
This may not reassure critics of the Bank’s independence….
Carney reveals he saw a copy of the HMT report two weeks ago at breakfast with the Chancellor
Osborne gave Carney an advance copy of the Treasury document on Brexit over breakfast – Carney says there was no collaboration
John Mann MP now takes up the issue of the Bank’s independence (or lack of) over Brexit.
He says the external members of the Monetary Policy Committee – Martin Weale and Gertjan Vlieghe – are being accused of simply “doing whatever the governor tells you to do”.
No-one has told me, or asked me, about which way these discussions should go.
Labour’s @JohnMannMP suggests BoE’s external MPC members are doing Mark Carney’s bidding. They politely disagree. pic.twitter.com/wr8Uu97Z95
Perhaps sensibly, Mark Carney declines to comment on the Brexit analysis issued by the Treasury yesterday, which predicted four quarters of recession.
Mark Carney then warns that a vote to leave the EU could prompt a ‘Pavolvian’ reaction in the City, pushing up the risk premium on UK assets.
But it would also be hard to the Bank to stimulate the economy, if a weaker pound drove up inflation.
Financial markets have an “almost Pavlovian response to bad news”, Mark Carney tells @RachelReevesMP.
Carney: After #Brexit, ex rate/supply side shock wld put upward pressure on inflation, reducing likelihood of stimulus even if econ slows.
Rachel Reeves then questions Mark Carney about the implications of Britain leaving the EU.
Mark Carney agrees that Brexit could cause the pound to weaken, creating an upside shock to inflation that would make it harder to keep interest rates low.
Committee chairman Andrew Tyrie steps in — perhaps worried that Mark Carney and Jacob Rees-Mogg might take their argument outside.
He tells the BoE governor that many members of the commitee would have been concerned if the Bank had NOT discussed the EU referendum.
If anyone’s reputation has been damaged by today’s performance, it’s not the Bank of England.
Carney be like pic.twitter.com/Oft0ElUXbL
Carney 3 Rees-Mogg 0
Jacob Rees-Mogg MP now accuses Carney of being influenced by chancellor George Osborne.
As the gloves come off, Carney insists that he’s not being played by government.
Rees-Mogg repeatedly trying to establish HMT influence over the Bank of England.
“There is no possibility of undue influence”, says Carney.
Rees-Mogg leaves Carney speechless after accusing him of getting “politically involved”. “I don’t think that’s worth replying to” #euref
Q: What contact have you had with George Osborne about the referendum?
Mark Carney says he has had a series of conversations around how membership of the EU allows the bank to achieve its monetary targets.
Mark Carney warns that sterling has been hit since November by the single issue of whether Britain stays in the EU, or leaves.
That’s why the Bank was right to flag up that the referendum could change monetary policy, he argues.
Now Jacob Rees-Mogg MP, a pro-Brexit MP, takes the microphone.
Q: In general elections, you don’t give a view on opposition policies, so why is the Bank giving its view on Brexit?
Carney in Treasury committee: no member of the MPC or FPC disagrees with their collective assessment of likely Brexit impact – 20 people
The Treasury committee now turns to other top officials from the Bank of England.
First Martin Weale, who sits on the monetary policy committee which sets interest rates. He says Brexit would probably have a materially negative impact on growth and inflation, in the short term.
It is the consensus view of the FPC that Brexit represents the biggest domestic risk to financial stability.
The key points so far:
Tyrie: Do you think it’s a good idea for the IMF to come over week before the #EURef & jump in with both feet? Carney: I think it’s a detail
To MPs Carney won’t rule out further interventions in Brexit debate, but says the broad issues have been set out
Next question for Mr Carney….
Q: Is it acceptable for the International Monetary Fund to turn up a week before the EU referendum and give its views? [explainer: the Fund is due to publish its full health check on the UK, including in-depth calculations on the ‘Brexit’ effect, next month]
Mark Carney begins his hearing by defending the Bank of England’s warning that Britain could plunge into recession if it leaves the EU.
Bank of England governor Mark Carney is appearing before parliament’s Treasury committee to answer questions about the UK economy, and his warnings against Brexit.
Here’s a livefeed.
Britain’s failure to hit its borrowing targets last year are a blow to chancellor George Osboene, as he tries to rally the country to remain in the EU.
Howard Archer of IHS Global Insight says:
The upwardly revised shortfall for 2015/16 leaves the Chancellor open to criticism that he clearly missed the 2015/16 public finances targets that were set out as recently as March’s budget – and could well be used by supporters of the UK leaving the EU as evidence that the Treasury’s forecasts are unreliable (although the public finance forecasts are actually done by the Office for Budget Responsibility).
Breaking: Britain missed its borrowing target last year by more than previously expected.
The UK borrowed almost £76bn in the 2015-16 financial year to cover the deficit, according to new figures just released by the Office for National Statistics.
*U.K. 2015-16 BUDGET DEFICIT GBP76B, REVISED FROM GBP74B
UK ONS: Public sector net debt at the end of April 2016 was £1,596.0 billion, equivalent to 83.3% of gross domestic product (GDP)
The pound has jumped this morning, after a new opinion poll gave the Remain campaign a big lead.
Sterling has gained half a cent against the US dollar, to $1.4538. This comes after the Daily Telegraph reported that the campaign to stay in Europe holds a 13-point lead over the Brexit camp.
Nessie formation, sterling. Bullish. https://t.co/zg7C4Ci8RO pic.twitter.com/uc41J8dQUE
Elsewhere in the eurozone, Germany’s largest bank has just had its credit rating slashed.
*CRYAN SAYS `VERY DISAPPOINTED’ IN MOODY’S DOWNGRADE (deutsche bank ceo)
In an encouraging sign for Athens, the yield on Greek debt has hit the lowest level since last November.
Investors are buying into Greece’s government bonds, in the hope that the country is less likely to default on its bonds. That shows they are expecting Greece to receive its much needed €11bn of bailout funds from the eurogroup today.
The FT’s Mehreen Kahn explains why this eurogroup meeting is a little different:
Healing the Great Schism between lenders – cameo on the Brussels Briefing before #eurogroup https://t.co/HXh3AarfEc pic.twitter.com/DNHbUVVHJ5
European stock markets have opened in the red, as investors watch to see how today’s eurogroup meeting proceeds.
Germany’s DAX led the declines, down 0.5% .
Whilst it seems almost guaranteed that Greece will receive this monetary boost, things aren’t so cut and dry. The IMF is reportedly refusing to participate in this latest bailout without Greece being granted ‘upfront and unconditional’ debt relief. The issue continues to be the one major division over the treatment of Greece, and could cause a few heated debates among the Eurozone’s finance ministers as they try and bridge the schism between those fiercely opposed to the idea and those willing to cut the country some debt-slack.
A surge in investment helped Germany’s economy to grow at the fastest pace in two years.
German Final GDP, Q1 “Boosted by strong investment, but unlikely to last” @ClausVistesen #PantheonMacro
Today’s eurogroup meeting begins at 3pm Brussels time, or 2pm in the UK.
And the AFP newswire explains why it matters:
Greece urgently needs the next tranche of bailout money to repay big loans to the European Central Bank (ECB) and IMF in July, and has already fallen behind in paying for everyday government duties and public sector wages.
The outcome of the meeting remains highly uncertain, due to a row between Greece’s creditors, the eurozone governments and the International Monetary Fund, over the state of the Greek economy and debt relief.
Royal Bank of Canada’s economics team are quite confident that Greece’s creditors will agree to hand over €11bn of bailout loans today.
Today’s meeting of euro area finance ministers will be focused on Greece. On Sunday, the Greek parliament passed a package of tax increases and reforms along with the contentious contingency to be deployed in the event of the 2018 budget going off track. Assuming it finds the measures acceptable, Eurogroup is expected to disperse the next tranche of programme funds (c.€11bn) which would allow Greece to meet forthcoming debt repayments and clear arrears which have built up as the review has dragged on.
The focus then moves on to debt relief with the ministers set to discuss options for debt relief that have been drawn up by officials as the euro area looks to bridge the gap between it and the IMF on the sustainability of Greece’s debt and allow the IMF participate in the latest Greek programme.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
“The implementation of debt relief should be completed by the end of the programme period.
“Providing an upfront, unconditional component to debt relief is critical to provide a strong and credible signal to markets about the commitment of official creditors to ensuring debt sustainability, which in itself could contribute to lowering market financing costs. An upfront component can also help garner more ownership for reforms.”
Related: IMF tells EU it must give Greece unconditional debt relief
Best way to make money today may be selling tickets to the inevitable ding-dong between Governor Carney and Conservative MP Jacob Rees-Mogg.
A new consortium led by a former Mothercare director is thought to be the frontrunner to rescue department store chain BHS as the threat of liquidation looms.