Greece’s international creditors are demanding the imposition of even tougher austerity measures despite the delivery this week of Antonio Samara’s hard-won €13.5bn package of cuts.
On the second day of negotiations in Athens, the troika – officials representing the European Union, European Central Bank and International Monetary Fund – reportedly pushed for Greece to make deeper cuts to the minimum wage and pensions, while imposing longer working hours.
Greece, which this week warned its economy was heading for a sixth year of recession, has asked Brussels to relax the terms of its bail-out conditions to allow the economy time to recover. The troika is reviewing Greece’s progress on austerity measures and its 2013 draft Budget to determine whether to approve the release of the next tranche of bail-out money worth €31bn.
But with awkward timing, it emerged that Greece has “unblocked” €30bn in order to push ahead with its plans to building a motor-racing circuitcapable of hosting Formula 1 Grand Prix. The total cost of constructing the track in Xalandritsa, near Patras, is expected to be €94.6m.
Spain’s prime minister Mariano Rajoy firmly denied reports that the country was ready to request a full bail-out. At a press conference following a highly anticipated meeting with Spain’s rebellious regional heads, Mr Rajoy was asked if “a bail-out request is imminent”; to which he said: “No.”
Traders reacted badly having hoped the uncertainty over Spain would end soon. The US’s Dow Jones dropped immediately. Most European bourses closed marginally down, except Spain’s Ibex which climbed 1pc.
Mr Rajoy said the regions had agreed to a “fiscal consolidation path” and insisted that there was no talk about Catalonia separating from Spain.
After bilateral talks with Finland’s prime minister, Jyrki Katainen, France’s Francois Hollande said: “On Spain and Greece, we both agreed that decisions should be taken in the next few weeks.”
Economists expect the ECB to leave interest rates unchanged at its monthly meeting tomorrow.