The European Stability Mechanism row damages the notion that the eurozone countries are capable of acting quickly
The plan to recapitalise banks was meant to be the easy part of the latest scheme to save the euro. Didn’t everybody agree that breaking the link between weak sovereigns and weak banks was a vital and urgent step? Wasn’t the central European Stability Mechanism (ESM) deemed the perfect vehicle to strengthen the balance sheets of teetering banks and thus offer a helping hand to the governments of the likes of Spain and Ireland?
Yes and yes. But now comes a powerful “no” in the form of a joint statement from the German, Dutch and Finnish finance ministries. The critical paragraph began with the words “regarding longer-term issues”, a giveaway that a classic piece of foot-dragging was on the way.
The ESM, declared the trio, can only go to work on bank recapitalisations “once the single [bank] supervisory mechanism is established and its effectiveness has been determined”. That latter could take years. Further, “legacy assets” should remain the responsibility of national governments. So are saying there should be no central hand-outs to cover past government-funded bailouts of banks.
The statement is a shocker. Even if there had not been riots in euroland yesterday, stock markets would have slumped on the news and bond yields in the periphery would have soared. If the will of the trio of northern objectors prevails, the €60bn (£47.8bn) needed to save the Spanish banking system will go directly on the Spanish government’s books, thereby making the arithmetic of the inevitable bailout of Madrid bigger and uglier. And poor old Ireland – the one country that the austerity disciplinarians could promote as a story of recovery – would get a slap in the face.
More fundamentally, the row over the role of the ESM damages the already-fragile notion that the eurozone countries are capable of acting quickly. Germany and the others seem guilty of sharp practice here – they are attempting to re-write an agreement whose general meaning had seemed clear. The time to argue these points was when use of the ESM was being debated by all.
But, if that’s the true picture of the state of eurozone relations, you can’t blame investors for wondering what other agreements could be challenged in future. It is a terrible climate in which to negotiate the conditions of the Spanish bailout. The backdrop to those delicate talks will now be poisonous.
Financial markets want the ECB to put its strong words of support into action when it meets in Frankfurt this week
Mario Draghi’s blunt statement that the ECB will do “whatever it takes” to safeguard the euro has raised expectations before the bank’s meeting in Frankfurt this week. Europe’s policy elite hit the panic button last week when interest rates on Spain’s 10-year bonds soared above 7.5%, triggering pledges of support for monetary union in its life-or-death struggle from Angela Merkel and François Hollande as well as Draghi, the Italian who took over as president of the ECB last year. Financial markets, which rallied strongly following Draghi’s comments, now want the central bank to put words into action, and have drawn up a list of possible options for what is seen as a crunch meeting.
Option 1 Bond buying
In the past, the ECB has bought the bonds of troubled member states – such as Spain and Italy – indirectly from players in the financial markets. These so-called secondary bond purchases through the securities markets programme have ceased in recent months, but the ECB could reactivate them. There are two drawbacks to this idea: the German Bundesbank is opposed and, in the event of a debt write-down similar to that already seen in Greece, the ECB will insist that it gets its money back in full. If the ECB takes a bigger share of the market, the potential losses for private-sector investors will be higher, and that could lead them to dump their bonds.
Option 2 Hand out more cheap cash to banks
One of Draghi’s first actions as ECB chief was to announce a long-term refinancing operation (LTRO). This provided cheap cash for Europe’s banks for a three-year period and was designed to help them with their day-to-day funding (or liquidity) requirements. A second LTRO followed early this year and there is speculation that a third could be announced on Thursday. The hope would be that Europe’s banks use the cash to buy the bonds issued by their own governments, although there is no guarantee that they would. The extra demand should push bond prices up and yields down. Draghi, judging by last week’s speech, appears to believe a third LTRO is not required.
Option 3 Joint ECB/EFSF action
The ECB is unlikely to risk German wrath by buying bonds directly from governments, something the Bundesbank insists would be illegal under the central bank’s constitution. But there could be joint action between the ECB and the bailout fund bankrolled by the member states of the eurozone. This is currently the European financial stability facility, but will become the European stability mechanism in September. One idea being floated is that the EFSF/ESM would buy up bonds from sovereign states and this would be reinforced by buying in the secondary markets by the ECB. The aim would be to push up the price of bonds, leading to a fall in the interest rates governments have to pay on borrowing. Lower interest rates should boost growth. Spain would be the most likely beneficiary of such a policy, but would have to subject itself to a formal bailout programme, something Madrid is unwilling to do.
Option 4 Make the bailout fund into a bank
One or two members of the ECB council have floated the notion of giving the ESM a banking licence. This sounds like a technical matter, but would have wide-ranging implications since it would make the bailout mechanism eligible for refinancing by the ECB. This would boost the power of the ESM, but is a no-no for the Germans, fearful would increase the risk of a downgrade for the AAA-rated countries putting up capital for the fund.
Option 5 Cut interest rates
The ECB cut its refinancing rate – the equivalent of the Bank of England’s bank rate – to 0.75% earlier this month and could decide on a further cut on Thursday. Such a move. A further cut on Thursday looks unlikely, and would be something of a damp squib for markets that are looking for something more. The risk of disappointment is high.
Roundup of what was said at the 18 summits held since the eurozone crisis erupted in late 2009
Since the eurozone crisis erupted in late 2009, there have been 18 Brussels summits. Here is what was said after the main gatherings:
February 11 2010 Greek prime minister George Papandreou: “We are willing to take all the reforms that are necessary to change the way the public sector is working in Greece.”
German Chancellor Angela Merkel:
“We know our responsibility for the stability of the euro zone and we belong together. Rules have to be respected, however. Greece did not ask us for any money today.”
French President Nicolas Sarkozy:
“We have delivered a very clear political signal: Greece is part of the European Union, of the euro zone, and we will support it.”
March 25-26 2010 Announcing plans for a bailout, then ECB president Jean-Claude Trichet says: “I think it’s a workable solution. I am confident the mechanism decided today will normally not need to be activated and that Greece will progressively regain the confidence of the market.”Portugese Prime Minister Jose Socrates -
“We hope it will not be necessary, because speculation is based on doubt and this accord gives some certainty to the market.”
“It is not about paying Greece’s debt but giving a signal that we are there to support them if necessary.”
Latvian Prime Minister Valdis Dombrovskis -
On help for Greece:
“Certainly I would expect a decision and it seems that the ideas are going towards having a package of bilateral loans and IMF loans. Bilateral loans as an instrument do not contradict the (EU) treaty so it is also sound from a legal point of view.”
How soon could it be?
“It has to be relatively quick. It is a matter of weeks, I would say.”
May 7 2010 Greece accepts a €110bn loan. EU monetary affairs commissioner, Olli Rehn, says the agreement “proves that we shall defend the euro whatever it takes. We are facing such exceptional circumstances today and the mechanism and the mechanism will stay in place as long as needed to safeguard financial stability.”. Finnish leader Matti Vanhanen says: “If the domino effect begins, no economy is safe.””We have asked the commission and the council to strictly enforce the (budget) recommendations addressed to member states,” leaders said in a joint statement.
June 17 2010 “I think we should encourage Spain that it is on the right track,” says Angela Merkel.
September 17th Summit:
Thursday’s European Union summit, which was meant to have focused on how the bloc could best engage with the outside world, was overshadowed by France’s expulsion of members of the Roma community. President Nicolas Sarkozy maintained, “Our argument is sound.”
October 27th-28th Summit:
“It is true that a Franco-German agreement is not everything in Europe. But without a Franco-German agreement, not much is possible,” Merkel said, German chancellor.
“Compared to the current situation,” European Council President Herman Van Rompuy told a press conference, “sanctions [on states that do not keep deficits in check] will kick in earlier and progressively. Public debt will be taken more into account alongside the deficit criteria. Sanctions will be possible before the 3-percent annual deficit is reached if not enough preventive action is taken.”
December 16 2010 Leaders agree to set up a permanent rescue fund, the European stability mechanism (ESM) after weeks of wrangling over the future of the euro, which also saw Ireland take a €65bn bailout. Herman Van Rompuy, president of the European Council, says: “The euro area leaders also underlined that we have a joint economic strategy and a political will to do whatever is required to ensure the eurozone’s stability.”German Chancellor Angela Merkel, after the summit, said the ESM was an expression of all-round solidarity. She also said 2011 will be a year of reform for a good number of euro zone countries.
4 Feb 2011 The one-day summit accepts Europe is not on track to meet its target for reducing energy use by 20% by 2020.
The post-summit accord says: “The EU and its member states will promote investment in renewables and safe and sustainable low carbon technologies.”
Greenpeace, the leading environmental group, says it is “disappointed there was no progress on binding energy efficiency targets ‘for now’, despite common agreement that the EU is failing in its ambitions”.
11 March 2011 The summit takes a surreal turn when French president Nicolas Sarkozy and UK prime minister David Cameron leave the other 25 EU leaders hanging around while they discus options against Libyan dictator Muammar Gaddafi.
24-25 March 2011 A summit to finalise Germany and France’s six-point solution to the euro crisis is derailed by the fall of the Portuguese government.
The Spanish prime minister, José Luis Rodríguez Zapatero, says he does not fear contagion from Portugal despite their close economic ties.
Merkel says: “This is a comprehensive package which I think is a big step forward. Whether it will be sufficient, only time will tell.”
June 23-24 2011 EU leaders agree the outline of a fresh €120bn bailout subject to more austerity, sending stock markets soaring. Eurogroup boss Jean-Claude Juncker urges Athens to meet its commitment. “All conditions must be met,” he says. “You can’t let anyone believe there is a plan B. If Greece does what it has to do, we will do what we have to do.”
21 July 2011 More details emerge of a further Greek bailout. Sarkozy hails it as a “historic moment”.
26 October 2011 Private sector involvement in the latest bailout is agreed. Charles Dallara, director of the Institute of International Finance, which represented the private sector in the talks, says: “We look forward to working with the Greek and European authorities to translate this framework into a concrete agreement that can deliver an early reduction in Greece’s debt and place it squarely on a path toward debt sustainability.”
8-9 -World Bank President Robert Zoellick said “It’s a very welcome and an important step because we have seen the ripple effects.”
-“I compliment the leaders of the European Union for facing and making difficult decisions. Of course problems like this can’t be solved by waving a magic wand, and the implementation of the three core elements will require follow through to ensure that with the market reactions, the banks can function more effectively and to ensure that euro zone countries are able to roll over their debt.”
December 2011 Cameron vetoes EU-wide treaty changes, saying they are not in Britain’s interests, “so I didn’t sign up to it”. “This is a breakthrough to a union of stability,” says Merkel. “We will use the crisis as a chance for a new beginning.”
“It’s going to be the basis for a good fiscal compact and more discipline in economic policy,” says Mario Draghi, new boss of the ECB.
“It was a tough decision but the right one,” said the prime minister. -Boris Johnson said: “David Cameron has played a blinder and he’s done the only thing that it was really open for him to do… I understand the argument in favour of these measures because everybody’s desperate to save the euro, but they would just mean a quite unacceptable loss of national sovereignty.” -Mr Hague said the move was “very sensible” and signing up would have meant a loss of national sovereignty.
1 March 2012 Fiscal pact agreed in December is signed, except by the UK. Van Rompuy says: “This stronger self-constraint by each and every one of you as regards debts and deficits is important in itself. It helps prevent a repetition of the sovereign debt crisis. It will thus also reinforce trust among member states, which is politically important as well.” Leaders of eurozone countries agreed to allocate funds faster for the EU permanent bailout fund.
Compiled by Emily Talbut and Joe Allen
The deal agreed on Friday conformed to German prescriptions for a minimalist bailout fund, but that fell short of European commission demands for the ‘mother of all firewalls’
Europe’s 17 single currency governments agreed to deliver €500 bn in new bailout funds on Friday in the hope of erecting a firewall big enough to contain the sovereign debt crisis, placate the markets, and encourage non-eurozone International Monetary Fund members to commit a similar sum to emergency reserves.
But the eurozone finance ministers, meeting in Copenhagen amid calls to erect the “mother of all firewalls”, ditched explicit earlier proposals to keep a further €240 bn (£200bn)in reserve for the next two years.
The deal agreed on Friday conformed to German prescriptions for a minimalist bailout fund, a recipe that the European commission in advance described as inadequate to the challenges confronting the euro.
Ministers endeavoured to impress the bond markets, the Americans, and the Chinese, trumpeting the agreement as worth “more than a trillion dollars” in the hope that this will press the big IMF donors into doubling the monetary fund’s reserves to a similar figure next month.
“We are now in a strong position for discussion on the IMF in April. It is a good signal,” said the French finance minister, Francois Baroin.
“All together the euro area is mobilising an overall firewall of approximately €800 bn, more than $1tn,” said a Eurogroup statement.
But that figure included €100bn in bilateral loans to Greece from EU countries in 2010 as well as €200bn to Ireland, Portugal and Greece from the temporary eurozone bailout fund which closes next year, although those three programmes will run their course until 2015.
The Copenhagen meeting degenerated into acrimony and some chaos when the Austrian finance minister, Maria Fekter, upstaged the eurozone leaders by first announcing an €800bn firewall.
Jena-Claude Juncker, the veteran Luxembourg prime minister who has been chairing the eurogroup for eight years and whose term expires in June, threw a wobbly and abruptly cancelled a media conference at which he was to unveil the decisions.
The new money comes in the form of the European Stability Mechanism (ESM), the permanent eurozone bailout kitty and embryonic European Monetary Fund which starts in July. The ESM’s launch has already been brought forward and ministers on Friday also agreed to speed up the process of paid-in capital to get the fund fully operational within two years.
Its lending capacity was capped at €500bn, as has long been planned.
“As of mid-2013, the maximum lending volume of ESM will be €500 bn. The combined lending ceiling of the ESM and the EFSF will continue to be set at €700 bn,” the statement said in reference to the three ongoing bailouts from the temporary fund or European Financial Stability Facility.
That fund totalled €440bn, leaving €240bn still available.
A draft statement on Thursday said the spare €240bn would be held in reserve for emergency use, but was dropped on Friday.
The permanent fund’s lending capacity hinges on €80bn being paid in five instalments till 2014 in order to retain a triple-A credit rating, meaning that it could be two years before the fund is operating fully as foreseen.
But the parallel running of the current temporary and the future permanent funds will ensure a lending capacity of €500 bn, the ministers said.
Wolfgang Schäuble, Germany’s powerful finance minister, is tipped to succeed Juncker in a post that the sovereign debt crisis has turned into one of the most crucial in the EU. But intense wrangling over how to divvy up a quartet of senior financial jobs meant those decisions were postponed.
Friday’s agreement represented yet another win in the long-running euro saga for Berlin in dictating the terms of the eurozone’s response to the crisis. France and others had argued for a trillion-euro firewall. Germany insisted the permanent fund should not exceed €500bn and on Monday conceded the €200bn of current bailouts could run concurrently.
“The euro area made substantial progress over the past 18 months to address the challenges stemming from the sovereign debt crisis,” the ministers declared. “Important improvements were made to improve the governance of the euro area … robust firewalls have been established. This comprehensive strategy has paid off.”
Nicolas Sarkozy continues to lag behind socialist rival Francois Hollande, despite his recent burst of activity.
Polling data released this morning (and conducted after a national TV address on Sunday night), found that Hollande would win 31% of votes in the first-round of April’s presidential election. Sarkozy, who has not yet thrown his chapeau into the ring, attracts 24.5% of support.
Hollande would then romp to victory a second round run-off by 58% to 42%.
This is crucially important for the eurozone, because Hollande has already said he would attempt to renegotiate the new euro-zone treaty.
Hollande has also vowed to do battle against “the world of finance”, promising new taxes on banks and the wealthy to fund higher state spending, tens of thousands more teachers, and a 150,000 subsidised positions for young people.
Should he win, relations between Germany and France would become rather more strained.
Belgium saw its borrowing costs climb this morning, at an auction of short-term debt.
It sold €2.58bn of three and six-month debt, towards the bottom end of its target of between €2.5bn and €3bn.
The six-month bills sold at a yield of 0.71%, jumping from 0.364% at an auction at the start of January (when investors were in cheery mood). The three-month bills sold at a yield of 0.506%, slightly higher than 0.429% earlier this month.
Not alarming yields – but perhaps a sign that the optimism created by the ECB’s €489bn LTRO last month is wearing off? Especially in the light of S&P’s decision to downgrade Belgium’s credit rating.
Economist Shaun Richards warns today that there are signs of investors deserting the euro and into the safety of the Japanese Yen and the Swiss franc.
He blogs that the Bank of Japan may soon be forced to intervene again to push the value of the yen down, while the Swiss franc is creeping close to the €1.20 limit set by the Swiss National Bank last year (when it effectively devalued the Swiss franc).
We may see a sort of dance for a while as markets tempt it and of course we may see phases where the Euro strengthens and helps the SNB out. But recently Euro strength against other currencies has not been repeated against the Swiss Franc. If we hang around here then human nature being what it is….
He also isn’t convinced that Greece will reach a debt deal, despite the optimism in Athens.
— Shaun Richards (@notayesmansecon) January 31, 2012
The latest Greek retail sales data shows that consumer spending continued to take a dive late last year.
Sales by volume fell 8.9% year-on-year in November (details here), continuing a steady decline though 2011.
Platon Monokroussos, economist at Eurobank, told Reuters the data showed that private spending continued to contract as Greeks hunkered down in the face of the recession, adding that:
Increasing unemployment and austerity are likely to continue weighing on disposable incomes and consumer demand in the first months of 2012.
Anxious retailers have even taken to playing ‘spot the shopping bag’ on Greek high streets — read more here.
Here’s a video clip of David Cameron explaining why he refused to join the fiscal compact, but dropped his opposition to the European court of justice being allowed to police the new rules.
Cameron said it was in Britain’s national interest for eurozone countries to “get on and sort out the mess that is the euro”. He also promised to take “appropriate action” if the new fiscal compact trampled on the single market.
Tory backbenchers aren’t placated, though. Mark Reckless MP told Sky News in the last few minutes that Cameron should hold an “in/out” referendum on Britain’s membership of the European Union.
Reckless also claimed that the European court of justice couldn’t be trusted to enforce the new fiscal rules.
News in from Athens where Helena Smith, our correspondent, says Greeks have woken up to the first signs of a faint glimmer of hope.
Greek media are reporting that the long-awaited bond swap between Greece and its private sector creditors will almost certainly be concluded this week and, as one commentator enthused: “on very favourable terms for Greece. The interest rate, we are hearing, on the [new] bonds could be as low as 3%. This is very good news for our country and all of those who have so painstakingly worked on this deal.”
Lucas Papademos, who heads Athens’ interim coalition government, told Greeks at a post-midnight press conference in Brussels, that “everything will, and must, be finished by the end of the week,” referring to the bond swap, known formally as the Private Sector Involvement (PSI), and ongoing negotiations over a second bailout agreement for the country with visiting representatives from the EU, IMF and ECB officially known as the “troika”. That has also brought a sense of relief – not least because every Greek now versed in the minutiae of economics, is acutely aware that both are aimed at making Greece’s €350bn mountain of debt sustatinable.
In a nation as proud as Greece, the mass selling daily, Ta Nea, has highlighted the nascent sense of optimism with the headline “The No’s [Nein] killed the commissioner,” referring to the disapproval engendered by a German proposal that an EU commissioner, with veto powers over the Greek
budget, be installed in Athens.
For once the austerity weary nation feels it has won a battle on the frontline of its great economic war.
Unemployment data for the whole eurozone has been released, and show that the jobless rate has hit its highest level since the euro was created, at 10.4%.
The number of jobless across the eurozone rose by 20,000 in December, taking the total up to 16.469 million, the eighth successive monthly rise.
Howard Archer of IHS Global Insight warned that the pattern is likely to continue:
Most labour markets are suffering, particularly in Greece, Portugal, Italy and Spain. And French unemployment is moving up worryingly appreciably.
As reported at 9.18am, German unemployment has dropped to its lowest rate in 20 years, while peripheral countries such as Italy are suffering rising unemployment.
on the front page of the Financial Times this morning, predicting that the European Central Bank may pump another trillion euros of cheap loans into the banking sector next month.There’s an interesting tale
According to the FT, the €489bn of three-year loans made in December (which are credited with restoring market confidence and pushing down most bond yields), is just the start. Another auction is scheduled for 29 February, and euro banks could ask for twice as much.
“They could do another €1tn easily in February,” said one senior banker. “It could be way more than that if things get worse in the markets.”
€1tn in extra loans would certainly be a worrying sign, suggesting that the European financial system has hit a very sticky patch. A Reuters poll yesterday predicted that the ECB would lend around €325bn.
UBS’s Paul Donovan: ‘In line with most euro summits the details will be worked out later.’
— Olly Barratt (@ollybarratt) January 31, 2012
David Cameron will make a statement to the House of Commons at 3.30pm today about yesterday’s EU summit.
As my colleague Andrew Sparrow points out in his Politics Live blog, the prime minister “has got some explaining to do” after dropping his objections to the eurozone countries using EU institutions to police their new fiscal union.
Conservative eurosceptics MPs are likely to give their leader a rough ride.
The Daily Mail has already put the boot in – comparing Cameron to John Major – and claiming that he was “sent like a naughty schoolboy to the back of the class” in the family photo….
…. and they may have a point. Cameron is the distant figure on the back row, far right (so to speak).
Germany’s unemployment rate has fallen to a new post-unification low. But over in Italy, the unemployment rate has hit its highest level in at least eight years.
Data released in the last few minutes showed that the number of people out of work in Germany fell by a seasonally adjusted 34,000 to 2.85 million in January, a new 20-year low. That cuts the German unemployment rate to 6.7%.
Over the Alps, though, Italy’s unemployment rate has jumped to 8.9%, the highest since national statistics body Istat began tracking the data in January 2004.
This shouldn’t be a surprise. We’ve seen plenty of economic data recently showing that German business leaders are still quite optimistic about prospects in 2012, while consumer spending is holding up OK. In Italy, though, austerity measures are now kicking in and companies are already making cutbacks.
As Bloomberg points out:
Fiat SpA, Italy’s biggest manufacturer, shut down its Termini Imerese factory at the end of last year as part of a plan to reduce costs and improve productivity in Italy as sales in the country slump. The Turin-based company agreed with unions to pay about €21m to support early retirement for about 640 workers.
There was one crumb of comfort in the Italian data – the jobless rate for 15-24 year olds dropped to 31% in December from 31.2% in November.
Eurozone countries will be barred from receiving financial help from the European Stability Mechanism unless they have already endorsed the fiscal compact. That is meant to encourage leaders to sign up quickly.
City analyst Gary Jenkins of Swordfish Research finds it somewhat ironic, though:
We may have the novel situation where countries are being provided with monies to not only pay for the normal running of government but also their fines for fiscal indiscipline.
Elisabeth Afseth, analyst at Investec, despairs at the failure of European leaders to achieve more yesterday.
Afseth argued that rather than showing “common purpose and direction”, EU leaders treated us to another display of discord. Germany’s aborted proposal to impose a European commissioner on Greece, and France’s determination to launch a financial transaction tax on its own, left Europe looking fragmented. What a shame, she added, that they didn’t achieve real progress by agreeing to enlarge the ESM.
In a research note, Afseth wrote:
What we got yesterday – we got more bickering at the sideline, agreement on a largely irrelevant treaty while the issue of the size of the ESM/EFSF was left till March. They could have used the opportunity to boost the size of the rescue fund now, building on the more positive market sentiment of late and in the process increased the chance of getting additional support from the IMF.
I guess it could be described as a consistent approach to the crisis; a German focus on austerity and no agreement on anything else.
If you’re catching up on events in Brussels yesterday, here are the key points from the summit:
• 25 countries endorsed the fiscal pact. They agreed to enshrine balanced budget legislation into their national law, with annual structural deficits capped at 0.5% of GDP. Transgressors face penalties of 0.1% of GDP, with fines being added to Europe’s bailout fund, the European Stability Mechanism (ESM). The UK and the Czech Republic declined to sign.
The new Treaty on Stability, Coordination and Governance (SCG) will come into force once it has been passed by the parliaments of at least 12 countries that use the euro.
• Euro area leaders confirmed that they will reassess whether the ESM, and its forerunner the European Financial Stability Facility (EFSF), have sufficient resource. They still plan to bring the ESM into force in July 2012.
• EU leaders agreed to a new drive to stimulate growth and create employment across the region, particularly for young people. Unused development funds will be used to create jobs. They also vowed to help small and medium enterprises to get access to credit, and to use the Single Market as a key driver for Europe’s economic growth.
• Leaders also opposed the suggestion that a ‘commissioner’ should be installed in Greece to ovesee its budget decisions. French president Nicolas Sarkozy warned that this would be undemocratic, as “the recovery process in Greece can only be enacted by the Greeks themselves.”
European stock markets have opened higher this morning, but British banks are still under pressure.
The FTSE 100 has risen 48 points to 5719 (up 0.8%). with traders saying there is some relief that progress was made in Brussels yesterday, and optimism over the Greek debt talks.
ARM Holdings (+6) and BSkyB (+2.9%) are leading the risers, after posting decent results this morning. But Lloyds (-2.7%), RBS (-1.2%) and Barclays (-0.5%) are among the biggest fallers though, defying a recovery in other European financial stocks.
Across Europe, Italy’s FTSE MIB is 1.1% higher, Germany DAX is up 0.7% and the French CAC gained 1%.
On the economic front, the latest jobless statistics will show the state of the employment markets in Germany and Italy. There’s also a couple of debt auctions to watch out for. Here’s an agenda:
• German unemployment data for January – 9am GMT / 10am CET
• Italian unemployment data for December – 9am GMT / 10am CET
• Eurozone unemployment data for December – 9am GMT / 10am CET
• Belgium auctions short-term debt – 10am GMT
• Hungary auctions short-term debt – morning….
+ Talks continue in Greece over its debt restructuring
Good morning all, and welcome to another day of rolling coverage of the eurozone crisis.
Today we’ll be digesting the impact of yesterday’s EU summit. The fiscal compact is agreed (although the UK and Czech Republic are both refusing to sign up), and leaders have agreed that the European Stability Mechanism will come into effect from July.
We’ll be finding out whether economists, City analysts and political experts believe the decisions taken in Brussels will help Europe tackle the crisis. What do you think?…
…And how much trouble is David Cameron in with his eurosceptic backbenchers, having agreed that the European court of justice can police the fiscal compact?
As usual, we’ll be tracking events in Greece (where talks between the government and its creditors are still continuing), and Portugal.