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The Guardian - UK
The Guardian - UK
Business
Angela Monaghan

Eurozone ministers: Greece must act faster on reforms - as it happened

An EU and a Greek flag wave in front of the ancient temple of Parthenon in Athens
An EU and a Greek flag wave in front of the ancient temple of Parthenon in Athens Photograph: Aris Messinis/AFP/Getty Images

Closing summary: Greece urged to work faster on reforms

Before closing up for the day, here is a summary of events on what has been a busy day.

The main event was the Eurogroup meeting in Bratislava, where eurozone finance ministers gathered to discuss Greece’s progress on reform. Athens is hoping to secure a €2.8bn tranche of bailout money, but it is dependent on a programme of 15 reforms.

With only two of the 15 reforms complete, ministers urged the Greek government to hurry up. The message was this: Athens still has time but it must work faster.

Eurogroup press conference
Eurogroup press conference

Other developments today:

  • The weak figures from Germany, as well as a failure by the ECB to announce more eurozone stimulus on Thursday, weighed on European stocks, with all major indices down. Europe’s STOXX 600 is currently down 0.7%, while the FTSE 100 is off 0.8% or 58 points.
  • Britain’s trade deficit narrowed in July to £11.8bn after exports rose but imports fell. The data suggested the sharp drop in the pound since the Brexit vote could be starting to feed through to increased exports.

Thank you for reading the blog today, and for all your comments. Have a great weekend, and please join us again on Monday. AM

Wall Street opens lower

US markets have opened down:

  • Dow Jones: -0.5% at 18,383
  • S&P 500: -0.7% at 2,167
  • Nasdaq: -0.8% at 5,218

There is a live feed on the margins of the Ecofin meeting in Bratislava, where Mario Monti, Italy’s former prime minister, will soon be speaking.

Wall Street is expected to open lower. North Korea’s most power nuclear test to date is likely to unnerve investors.

Meanwhile Boston Fed President Eric Rosengren - historically a dovish policymaker in favour of lower rates - said the Federal Reserve increasingly faces risks by failing to raise interest rates.

Updated

Oil falls below $49 but set for weekly rise

Brent crude oil is down 2.4% at $48.77 a barrel.

However, prices are still on course for the first weekly gain in three weeks after oil producers Russia and Saudi Arabia agreed to work together to rebalance the markets.

Prices have also been boosted over the week by the International Energy Agency, which said oil demand should finally exceed supply in the third quarter of 2016, meaning global stockpiles could start to fall.

The Greek prime minister Alexis Tsipras has been addressing leaders of southern European countries who are in Athens for a (Club Med) summit:

Our countries have in recent years been disproportionately affected by the economic crisis... and are on the front line of migratory flows. We were on the front line of the parallel crises which have tested Europe.

He added in an interview with the EurActiv news website:

In such a debate, Europe’s Mediterranean countries can and must raise their voice. The way to have a bigger say is to seek a common approach and common positions.

Tim Martin
Tim Martin

Here in the UK, the Eurosceptic chairman of the Wetherspoon’s pub chain has blasted Britain’s establishment stance over the Brexit vote.

Tim Martin, who also founded Wetherspoon’s, said those predicting doom had been proved wrong:

In the run-up to, and the aftermath of, the recent referendum, the overwhelming majority of FTSE 100 companies, the employers’ organisation CBI, the IMF, the OECD, the Treasury, the leaders of all the main political parties and almost all representatives of British universities forecast trouble, often in lurid terms, for the economy, in the event of the leave vote.

City voices such as PwC and Goldman Sachs, and the great preponderance of banks and other institutions, also leant weight to this negative view.

Martin added there was no need for anxiety over a UK trade deal with the EU:

‘Scare Story 2’ is that failure to agree on a trade deal with the EU will have devastating consequences.

Common sense suggests that the worst approach for the UK is to insist on the necessity of a ‘deal’ – we don’t need one and the fact that EU countries sell us twice as much as we sell them creates a hugely powerful negotiating position.”

Updated

The party continues in Bratislava, where the Eurogroup meeting has ended but the broader Ecofin meeting of EU finance ministers is underway.

Top of the agenda is “the future of the EU economic policies”.

Ministers will assess whether the existing framework is sufficient for the current unprecedented challenges such as migration, Brexit or security challenges.

Peter Kažimír, Slovakia’s finance minister and Ecofin host, adds:

The aim is to draw a lesson from previous mistakes and gradually design tools enabling us to avoid or at least to mitigate possible future crises.

Eurogroup has published a list of its “main results”, here.

Specifically on Greece, it says:

The institutions and the Greek minister for finance, Euclid Tsakalotos, briefed the Eurogroup on the state of play of the implementation of Greece’s economic adjustment programme.

The Greek authorities intend to complete the milestones, agreed in the context of the programme’s first review in a timely manner.

These include 15 measures relating to privatisation, energy sector reform, bank governance and the establishment of the revenue agency. The achievement of these milestones is a condition for a disbursement of €2.8 billion by the European Stability Mechanism
Representatives of the institutions will be travelling to Athens shortly to prepare for the start of the second review of the programme.

Markets in Europe are still in gloomy mood, with all major indices down this afternoon:

  • FTSE 100: -0.4% at 6,832
  • Germany’s DAX: -0.3% at 10,640
  • France’s CAC: -0.5% at 4,520
  • Italy’s FTSE MIB: -0.6% at 17,278
  • Spain’s IBEX: -0.2% at 9,084
  • Europe’s STOXX 600: -0.4% at 348

Tesco has commented since the news broke that the SFO has charged three former executives with fraud.

The retailer said in a statement:

We note the decision of the SFO to bring a prosecution against former colleagues in relation to historic issues and acknowledge the investigation into the company is ongoing.

Tesco continues to cooperate with the SFO’s investigation. The last two years have seen an extensive programme of change at Tesco, but given this is an ongoing legal matter, we are unable to provide any further comment at this time.

Updated

As a reminder, here is the background to the Serious Fraud Office investigation into accounting practices at Tesco, which led to a £263m profit overstatement:

The basic message today from eurozone finance ministers in Bratislava to Greece:

i.e. HURRY UP. Please.

Breaking: SFO charges three with fraud in Tesco investigation

Tesco

Britain’s Serious Fraud Office has charged three senior former executives at Tesco with fraud, as part of its investigation into an accounting scandal at the supermarket chain.

The SFO said it had charged Carl Rogberg, 49, Christopher Bush, 50, and John Scouler, 48, “with one count of fraud by abuse of position, contrary to section 1 and 4 of the Fraud Act 2006 and one count of false accounting contrary to s17 Theft Act 1968.”

The SFO added:

The alleged activity occurred between February 2014 and September 2014.

The above-named individuals have been requisitioned to appear at Westminster Magistrates’ Court on 22 September 2016.

The investigation into Tesco PLC remains ongoing.

Bush was managing director of Tesco UK, Rogberg was UK finance director, and Scouler was UK food commercial director. All three were suspended over the scandal.

More soon.

Updated

Greece’s prime minister Alexis Tsipras is meeting French president Francois Hollande, Italy’s Matteo Renzi and the leaders of Portugal, Malta and Cyprus in Athens today for a four-hour conclave aimed at winning backing for a southern European pushback against austerity.

Tsipras wants a joint stance on the need to ease fiscal rules with Europe’s other six Mediterranean countries – Spain’s acting PM, Mario Rajoy, was invited but is too busy trying to form a government at home – ahead of the EU summit on 16 September (without Britain) in Bratislava.

Tsipras has long argued that the fiscal straitjacket favoured by Germany will never allow weak economies such as Greece’s to recover, and said in an interview with Le Monde on Thursday that the EU stability pact – whose budget deficit limits have already been tested by France, Italy, Spain and Portugal, “is not the word of God”.

“We want to promote a common approach among the countries … which, objectively, were the most affected by the crisis,” he told the paper. “If we do not give priority to employment, Europe risks decomposition. It is true Greece has been the black sheep for quite a while. But I think our partners have understood that the Greek experiment should not be made elsewhere in Europe.”

German MPs warned the putative “Euro-Med” bloc, which will be joined for the meeting by ECB head Mario Draghi, against taking any action that might damage the EU, saying a strong and stable union was more essential than ever following the Brexit vote.

Conservative MP Markus Ferber told newspaper Die Welt he was concerned the southern countries could form a “coalition of redistributors” that would threaten Europe’s financial stability: “After Britain’s departure, the ‘Club Med’ will have a blocking minority that can prevent all kinds of laws that it does not like,” he said.

Updated

Away from Bratislava and in Athens itself, the Greek Prime Minister is hosting a meeting of leaders from Europe’s other Mediterranean countries, aimed at finding common ground.

EU's Moscovici: Greece is behind on reforms

Pierre Moscovici speaks at the press conference in Bratislava
Pierre Moscovici speaks at the press conference in Bratislava

Pierre Moscovici, European commissioner for economic and financial affairs is giving a bit more detail on Greek reforms.

He says that ministers are satisfied that two out of 15 agreed ‘milestones’ have been achieved by Greece:

The 13 others are not on track or underway. There is progress, but this needs to be completed.

[We] insist that the job is done, it is necessary. And the Greek authorities must know that we are waiting for them, for the matter of trust and efficiency.

It is true too that we have lost some time, but I think we must balance that judgement by other considerations. The first one is that we can see an acceleration of work in the last days.

The second point of balance is that it is still feasible to reach the completion of the milestones on time, and that is clearly what [the Greek finance minister] Euclid Tsakalotos said in the meeting.

So we have to tell them clearly that they need to stick to their commitments and be really demanding, but at the same time let’s not dramatise. We are still in capacity to reach this agreement.

We all want it, there is a political will.

Updated

The European Central Bank’s Benoît Cœuré is pitching in. He is going over the central bank’s decision on Thursday not to introduce more monetary stimulus at this time.

[Nothing new here.]

Here is the official statement from the Eurogroup meeting, which is focused on spending reviews and public finances across eurozone countries.

Dijsselbloem says there was a general signal from ministers that Greece must speed up progress on reforms:

Today we discussed first of all the state of affairs in Greece. We took stock of the progress. There are number of milestones still pending to fully complete the first review and coupled with those are further disbursements. So we took stock of those and heard a little about the issues at stake.

There was a general feeling that we must not lose time - the time scale that was drawn up and agreed in May 2016 - so more progress is needed and we strongly encouraged the Greek government as a whole to speed up the implementation of the remaining milestones.

That of course could also help in ensuring a timely start and completion of the second review. The work on that will have to start very soon also. Against this background, we were happy to hear from our Greek colleague his commitment to do that work very quickly. We will be following that closely in the coming weeks.

Updated

Eurogroup President Jeroen Dijsselbloem kicks off by saying there are positive signs in the eurozone:

There are many challenges ahead. The economic recovery is progressing, growth returned to almost all of our countries and there are positive signs throughout the eurozone.

The Eurogroup press conference is coming up here...

UK expectations for rate hikes hit record low

The proportion of British people who think the Bank of England will raise interest rates over the next year has fallen to a record low.

The Bank said 21% of people surveyed in August expected it to raise interest rates in the next 12 months, down sharply from 41% in May. It was the lowest level since the survey began in 1999.

Mark Carney and his colleagues on the Bank’s Monetary Policy Committee cut rates to a record low of 0.25% on 4 August, in a bid to limit the potential negative impact of the Brexit vote.

The MPC has signalled more action will follow if the economic data deems it necessary.

The poll of 2,177 people aged 16 and over was conducted on 8-9 August, a few days after the rate cut.

Sir Philip Green denies dragging his feet over BHS

Sir Philip Green
Sir Philip Green

Sir Philip Green, the former owner of collapsed retailer BHS, has denied dragging his feet over reaching a settlement for the firm’s 20,000 pensioners.

He has also denied putting pressure on the Pensions Regulator over a potential deal. Green sold BHS for £1 a little more than a year before it collapsed in April, leaving an estimated pensions black hole of £571m.

Green has issued a statement today, in response to allegations by Frank Field MP, chairman of the work and pensions committee.

Green said:

Mr Field suggested in the House of Commons on Wednesday there was a lack of willingness on my part to reach a settlement with regard to the pension fund. This is untrue, totally inaccurate and unhelpful in solving this issue.

There have also been suggestions in the press that I have tried to pressurise the regulator, or, as was stated on the front page of one newspaper, ‘blackmail’ it. This is wholly untrue. I am not in control of the process. I am following the process which has been set down by the regulator.

I would like to apologise sincerely to all the BHS people involved in this sorry affair. Contrary to all the coverage I have been working on this issue on a daily basis, and will continue to do so with my best efforts to achieve a satisfactory outcome for all involved as soon as possible.

Heat is on Greece over reform progress

Sticking with Dijsselbloem, he has given the best soundbite on Greece from Bratislava so far today:

The pressure is back on. The summer is over. Pack up the camping gear, get back to work.

The deal was that Greece would implement 15 reforms in September - including privatisation plans and energy sector changes - in exchange for a final €2.8bn tranche of emergency funding.

Wolfgang Schaeuble, Germany’s finance minister, said there was still time for Greece to come good on its side of the bargain:

Schaeuble speaks to reporters in Bratislava
Schaeuble speaks to reporters in Bratislava

Today is 9 September, so there is still time for Greece.

It’s not new that, with Greece, we see the implementation of the measures that have been agreed towards the final phase of the agreed time frame.

Hopefully we’ll be able to glean more on the mood of the meeting at the press conference which is due to start in a about 20 minutes or so.

Eurogroup head: UK must make up its mind on Brexit

Jeroen Dijsselbloem, president of the group of eurozone finance ministers has offered some thoughts on the Brexit thoughts.

Speaking in Bratislava before ministers got down to business on Greek bailout talks, he said Britain must make up its mind on the start of formal divorce proceedings:

For the Brexit process, it really is up to the British to make up their minds, in terms of when to start and how to get it on the road.

I think, in the end, it will be the British economy that is damaged most, which I don’t hope for but, I mean, this is my concern.

Here is our full story on Sports Direct, whose biggest investors have met with the board and are demanding an independent review of working practices and governance:

UK construction holds up after Brexit vote

Construction output was steady in July, faring better than expected a month after the Brexit vote.

UK building site

A zero rise in output in July followed a 1% drop in June, easily beating expectations of a 0.8% fall.

It lowered the annual rate of contraction in output to 1.5% from 2.2% in June.

Paul Hollingsworth, UK economist at Capital Economics, says the construction figures form the ONS are the latest to suggest the economy held up better than expected following the EU referendum:

The latest post-referendum official figures indicated that the construction sector held up better than expected in July, and the trade deficit narrowed, continuing the recent trend of relatively upbeat data.

The upshot is that while it is still early days, the latest figures give us little reason to alter our view that the immediate impact of the vote to leave the EU will be less severe than many had anticipated.

UK trade deficit narrows

Britain’s trade in goods deficit narrowed to £11.8bn in July, down £1.2bn compared with a year earlier.

Britain’s trade in goods deficit fell in July
Britain’s trade in goods deficit fell in July Photograph: ONS

Exports increased by £800m to £28.4bn, while imports fell £300m to £36.6bn.

The figures from the Office for National Statistics were roughly in line with expectations.

This is the first full month of trade data since the Brexit vote on 23 June sent the pound sharply lower. Given a weaker pound makes British goods cheaper abroad, are we seeing a boost in these numbers?

Surprise fall in German exports raises growth concerns

Figures published in Germany earlier revealed a surprise fall in exports in July, brining down the country’s trade surplus.

Exports fell by 2.6% over the month, following a downwardly revised 0.2% increase in June. It was the sharpest fall in almost and year, and well below economists’ expectations of a 0.25% increase.

Imports also fell unexpectedly, by 0.7%. Economists had predicted a 0.8% rise. It brought Germany’s trade surplus down to €19.4bn in July from €21.4bn in June.

Carsten Brzeski, ING’s chief economist for Germany and Austria, said the figures would add to concerns about growth in Europe’s largest economy:

Forget July. The month of July was clearly not a good month for Germany. Not only did July see the German national soccer team leave the European Championships after the semi-final, it saw industrial and trade data taking a deep nosedive.

Today’s data confirm the picture already painted by earlier industrial data: the former powerful engine of the German economy –industry – is stuttering.

Either the entire industry took an early and long summer break, or Brexit and a general weakness in Germany’s main export partners left another mark on the economy.

A further cooling of the economy in the months ahead should give more support to just-started discussions about fiscal stimulus. Right now, the discussions only focus on minor tax cuts but they could easily grow into a general debate on more fiscal support for investment to increase the German economy’s potential growth rate.

Pound makes modest gains

The pound is up against both the dollar and the euro this morning, as we await the latest official UK data on trade and construction.

pound and euro

The pound is up just a touch (0.02%) against the dollar at $1.3298, and 0.1% against the euro at €1.273.

Data out shortly is expected to show Britain’s trade deficit with the rest of the world was £11.75bn in July.

The government will be hoping that a weaker pound since the Brexit vote will drive exports up in the coming months and the trade deficit down.

Construction data is expected to show that output on Britain’s building sites fell 0.8% in July, following a 0.9% drop in June.

There will be a press conference from Bratislava at 12pm local time (11am UK time). There should be a live stream here. The heat is on Athens:

European markets fall

Investors are in a downbeat mood this morning, disappointed by Mario Draghi who failed to unleash any further monetary ammunition on Thursday.

The FTSE 100 is down 13 points or 0.2%.

  • FTSE 100: -0.2% at 6,846
  • Germany’s DAX: -0.3% at 10,644
  • France’s CAC: -0.2% at 4,533
  • Italy’s FTSE MIB: -0.1% at 17,361
  • Spain’s IBEX: +0.1% at 9,113
  • Europe’s STOXX 600: -0.3% at 348

Sports Direct meets investor group to discuss way forward

Sports Direct, the under pressure retailer founded by Mike Ashley, has met with shareholder pressure group the Investor Forum about a way forward.

Mike Ashley
Mike Ashley

The company is facing intense scrutiny over poor working practices and corporate governance, culminating on Wednesday with a fiery annual meeting.

An emphatic 53% of independent investors voted against the re-election of chairman Keith Hellawell, who claimed he could regain their trust over the next 12 months but resign if he failed.

The Investor Forum has now revealed that following the AGM it chaired a meeting between major shareholders and the Sports Direct board, “to discuss how trust can be re-built in the company and board.”

Andy Griffiths, executive director of the Investor Forum:

Independent shareholders have sent a clear message to the Board of Sports Direct through their votes at the AGM and in their public statements.

We are encouraged by Sports Direct’s recent open approach, publishing the working practices report and hosting an open day. These, however, are only the first steps in a long journey towards rebuilding trust and shareholder value.

Our focus in the coming weeks will be on identifying key milestones to achieve this goal and, in particular, reaching agreement regarding the specific nature, remit and timing of the 360 and governance reviews.

Facilitating a constructive dialogue on this will take on heightened importance over the next three months before the General Meeting required to re-elect the Chairman.

Updated

The agenda for today’s Eurogroup meeting can be found here.

Here is the outline for discussion on Greece:

Greece – state of play

The Eurogroup will discuss the state of play of the macroeconomic adjustment programme to Greece. In particular, the Ministers are expected to be informed by the institutions and the Greek authorities on the implementation of the milestones and progress with arrears clearance, as defined in the Eurogroup statement on Greece of 25 May, as well as the next steps for the second review.

The Eurogroup statement of 25 May indicates that the additional disbursement after the summer under the second tranche will be subject to the completion of milestones related to privatization, including the new Privatization and Investment Fund, bank governance, revenue agency and energy sector reforms as well as progress in clearing of net arrears.

The tough words have begun in Bratislava, with a declaration Austria’s finance minister Hans Jörg Schelling that Athens has not fulfilled its side of the bargain:

Oil prices are also likely to influence equities this morning according to the Jasper Lawler from CMC Markets:

Stocks in Europe look set for a lower open as investors continue to digest disappointment from the latest ECB meeting while a big drawdown in US oil inventories has sent Brent crude back towards $50 per barrel.

Oil prices gained nearly 5% in 24 hours in response to American Petroleum Institute and Department of Energy inventory weekly figures.

Storms Gaston and Hermene prevented imports coming in from Africa and the Middle East on the East Coast and its estimated US oil output may have dropped over 10% as rigs closed down.

The huge two-day rebound in oil prices has been to a large extent ignored by stock markets and could play a bigger role on Friday, whether there is less corporate and economic data.

Brent crude is down 1.2% at the moment however, at $49.35 a barrel.

European markets are expected to open lower this morning.

Investors were disappointed that Mario Draghi and his colleagues at the European Central Bank failed to announce more stimulus for the eurozone economy when they met yesterday.

The agenda: eurozone ministers hold key talks on Greece

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

All eyes are on Greece again as eurozone finance ministers meet to discuss whether or not to hand over to Athens the next trance of emergency funding.

Back in May, ministers agreed a €10.3bn funding package for Greece, with €7.5bn handed over immediately.

Today’s Eurogroup meeting in Bratislava will be focused on whether or not to release the remaining €2.8bn.

This is not necessarily going to be straightforward, given recent reports that Athens has met only two of the 15 reform measures agreed on with its eurozone partners.

Stick with us for developments in Bratislava.

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