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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Greece holds Independence Day parade as cash crisis deepens - as it happened

US M113 armoured personnel carriers lined in the street for the military parade in Athens.
US M113 armoured personnel carriers lined in the street for the military parade in Athens. Photograph: Michael Debets/Demotix/Corbis

Closing summary: Brussels rains on Greece's parade

A military tank takes part in the Independence Day parade in Athens, Greece, today.
A military tank takes part in the Independence Day parade in Athens, Greece, today. Photograph: Marios Lolos/Xinhua Press/Corbis

Time to recap.

Greece’s efforts to avoid bankruptcy have hit another hurdle, raising the risk of default next month.

Officials ruled against Athens’ claim that €1.2bn of funds was wrongly taken back by the eurozone’s bailout fund last month, and should be returned. That dashes hopes that the money could be used to tide Greece over the next few weeks.

A spokesman explained that:

“There was agreement that, legally, there was no overpayment from the [Greek bank recapitalisation fund] to the EFSF.”

The FT has a good take, here (£).

The news weighed on Europe’s stock markets, which ended the day in the red.

The Euro Working Group has also given Greece until Monday to produce a credible list of reforms, before any bailout funds will be extended.

The news came after Greece marked the anniversary of its 1821 battle for independence, with a military parade in Athens (photos and coverage starts here)

Presidential Guards march during a military parade on Greece’s Independence Day in Athens marking the start of the uprising against the Ottomans back in 1821. -- Thousands witness military parade in central Athens avenue despite wet weather as a celebration for the country’s annual Independence Day that marks the start of the uprising against the Ottomans back in 1821. --- Image by © Alexandros Michailidis/Demotix/Corbis
Presidential Guards march during the military parade on Greece’s Independence Day in Athens. Photograph: Alexandros Michailidis/Demotix/Corbis

Soldiers, tanks, fighter jets and helicopters were all deployed in a show of pride, on a rainy day in the capital. Unlike in recent years, the absence of security fences allowed thousands of Athenians to experience the event, and meet senior politicians including prime minister Alexis Tsipras afterwards.

Some, though, felt the display of military might was too jingoistic.

European Commission chief Jean-Claude Juncker told MEPs he was more optimistic that a breakthrough will be reached in time.

He said (via the Daily Telegraph):

“I have to recognise that I was very pessimistic during the last weeks because there was no progress whatsoever”.

“But now we are back in a normal process and I do think that we can come to a conclusion that will be both in favour of Greece, we love Greece, and the European Union”.

There are renewed fears, though, that Greece’s banks are running out of funds - after the European Central Bank extended another couple of billion euros in emergency liquidity.

Meanwhile in the UK, another Bank of England policymaker has suggested that interest rates could be cut. Kristin Forbes also believes inflation is probably turning negative this month.

And unions fear job cuts after two US food giants, Kraft and Heinz, announced merger plans.

Thanks, and goodnight... GW

Updated

Shares in UK technology firm ARM slid 6% today, helping to push the Footse 100 index into the red.

My colleague Nick Fletcher explains:

Leading shares fell back below 7000 as worries about the US economy dragged down markets.

Technology shares came under pressure, with chip designer Arm down 73p at £11.27. Traders said growth stocks were being sold on both sides of the Atlantic, while a downgrade of Advanced Micro Devices from neutral to sell by UBS helped unsettle the semiconductor sector.

And here’s Nick’s full market report, with details of all the main moves:

Weak US data also hit shares in Europe, points out Tony Cross, market analyst at Trustnet Direct:

Once again it’s been some worse than expected readings out of the US that have gripped the attention of traders during the session, leaving the FTSE-100 to close below the 7,000 level and the concern is whether this is the start of another rout.

US durable goods data came in significantly worse than forecast, but with the Federal Reserve continuing to advocate the line that there’s still room for a rate hike in the summer, some investors appear to be taking fright at the prospect.

European markets fall

Europe’s stock markets finished the day in the red.

European stock markets, March 25 2015
The closing prices of the main European bourses tonight. Photograph: Thomson Reuters

The news that Greece had lost its claim for €1.2bn from the European bailout authorities has hit sentiment, says Chris Beauchamp of IG.

A resurgence of Greek woes has caught markets off guard, as the country finds its cash reserves slipping through its fingers.

An attempt by the Athens government to recover €1.2 billion that it believes was incorrectly handed over has been slapped down by the rest of the eurozone, and while the ceiling on emergency liquidity has been raised, this is perhaps the most temporary of temporary measures. It seems the eurozone is now determined to push Greece to the wall and ensure that Athens cooperates.

Such very public falling-outs do nothing for investor confidence, which seems to be sapping despite an eight-month high in business confidence in Germany.

Updated

Shares are sliding on Wall Street, following today’s decline in US durable goods sales and data showing that business investment spending plans fell for a sixth straight month in February.

The head of the European Council, Donald Tusk, continues to resist holding a special summit to tackle the Greek bailout...

... while his counterpart at the Commission reckons the situation is improving.

Updated

Kristin Forbes; UK inflation probably turning negative

Kristin Forbes.
.

Bank of England policymaker Kristin Forbes has told the Evening Standard that UK inflation will probably keep falling after hitting zero last month.

And if it falls too far, the BoE could cut interest rates from their current record low of 0.5%, she added

Reuters has snapped the key points

  • BANK OF ENGLAND’S FORBES SAYS VERY GOOD CHANCE INFLATION WILL FALL NEXT MONTH AND BE NEGATIVE - LONDON EVENING STANDARD
  • BANK OF ENGLAND’S FORBES SAYS LOW INFLATION IS UNLIKELY TO PERSIST
  • BANK OF ENGLAND’S FORBES SAYS STERLING STRENGTH LIKELY TO CAUSE IMPORT PRICES TO FALL FURTHER, POWERFUL TREND OF GLOBAL DISINFLATION
  • BANK OF ENGLAND’S FORBES SAYS WAGES HAVE BEGUN TO PICK UP, COUNTERACTS LOW INFLATION
  • BANK OF ENGLAND’S FORBES SAYS BOE CAN CUT RATES BELOW 0.5 PCT IF NEEDED TO RESPOND TO LOW PERSISTENTLY LOW INFLATION

Chatter about a potential UK rate cut is growing, points out economist Sean Richards (who has been predicting for months that this could happen).

ECB "raises Greek liquidity limit again"

Newsflash from Bloomberg: The European Central Bank has reportedly agreed to raise the emergency liquidity on offer to Greek banks, to €71bn.

That’s good news, as it means they shouldn’t run out of funds tomorrow. But also bad news, as it suggests they continue to leak deposits as anxious savers withdraw funds.

Bloomberg also has details of the conference call that took place between Greece and its lenders today -- Athens has apparently been given until Monday to produce a new programme of reforms.

Yesterday, Greece said it would have this plan ready by Monday “at the latest”; it could be a busy weekend at the Finance Ministry.....

Unions alarmed by Heinz/Kraft merger

British unions fear that the mega-merger announced between Heinz and Kraft today will lead to job losses.

Unite is urgently seeking a meeting with Heinz management, to find out what the deal means for their UK operations.

National officer Julia Long says:

“We and our trade union colleagues in the food industry around the world know from experience that deals like this often involve job losses and ruthless cost-cutting, as global capital wants a quick return on its investment.

News of this merger is a bolt from the blue for our members at Heinz. They deserve better, and we will be fighting for a better deal for them.

Mandatory Credit: Photo by Bruce Adams/Associated Newspapers/REX (3577393a) Aerial Views Of The Heinz Factory At Kit Green Near Wigan Lancs. The Company’s Largest In The World. Aerial Views Of The Heinz Factory At Kit Green Near Wigan Lancs. The Company’s Largest In The World.
The Heinz Factory At Kit Green, near Wigan, Lancashire. Photograph: Bruce Adams/Associated Newsp/REX/Bruce Adams/Associated Newsp/REX

Kraft shareholders are sharing in a $10bn special dividend, paid for by Heinz owners, Berkshire Hathaway and 3G Capital, to ease the deal through. Workers don’t get such sweeteners, though.

Long says:

“The fact that shareholders have been hosed down with cash, while workers seem to have been kept in the dark is concerning.“We sincerely hope that this is not the shape of things to come. These companies have worked with unions to build their prosperity in the past and need to do so in this new entity too.”

More than 1,000 Unite members work at Heinz’s canning operation in Wigan, with others based at Hayes, Kendal, Leamington Spa, Luton, Norfolk and Telford, as well as Dundalk in the Irish Republic.

The US dollar has lost ground in the currency markets after weaker than expected durable goods data hit the wires.

Orders for US durable goods (such as long-lasting consumer products and machinery), fell by 1.4% in Febuary, extending the worst run since the depths of the financial crisis.

This sent the euro up almost half a cent, to $1.096, and the pound up exactly half a cent to $1.49.

The German finance ministry has now confirmed, to Reuters, that Greece’s claim that €1.2bn of its money was wrongly taken by Brussels last month has been rebuffed.

Blow for Greece over €1.2n refund hopes

Bad news for Athens. Brussels journalists are reporting that Greece will not be receiving €1.2bn back from the European Union’s bailout fund.

This relates to almost €11n of unused rescue funding which Brussels recovered from Greece in February. Greece had argued that Brussels officials had wrongly taken €1.2bn which didn’t actually belong to the rescue fund, and wanted it back to cover its funding needs.

Updated

And here’s a better picture of the tanks which rolled past the Athens parliament this morning:

Hellenic army tanks participate in a military parade marking Greece’s Independence Day in front of the parliament building in Athens March 25, 2015. Hundreds of Greeks lined Athens main street outside parliament on Wednesday to watch the Independence Day parade after being banned in previous years for security reasons. REUTERS/Alkis Konstantinidis
. Photograph: Alkis Konstantinidis/REUTERS

Greece’s Prime Minister Alexis Tsipras (front left), Parliament President Zoi Konstantopoulou (front 2nd left), leader of the Greek church Archbishop Ieronimos (front 2nd right) and Defense Minister Panos Kammenos attending the parade today.
Greece’s Prime Minister Alexis Tsipras (front left), Parliament President Zoi Konstantopoulou (front 2nd left), leader of the Greek church Archbishop Ieronimos (front 2nd right) and Defense Minister Panos Kammenos attending the parade today. Photograph: Alkis Konstantinidis/REUTERS

There was a different feel about today’s Independence Day parade in Athens, as Greece’s PM and president both mingled with attendees afterwards.

The new government’s decision to take away the security gates ouside parliament also helped, as Keep Talking Greece explains:

The new Greek government decision to remove barriers and allow people to attend the parades at close range has a strong symbolism aiming to demonstrate that neither the government is afraid of protests nor the people feel the need to protest austerity.

Crowds of people joined the school students’ parade yesterday and the military parade in downtown Athens today. No stiff lip, no riot police around, no metro stations closed to public.

More here: Greeks enjoy Independence Day parades without barriers

Greek thoughts, from Bank of America-Merrill Lynch’s analysts:

Greece’s finance minister, Yanis Varoufakis, has been marking Independence Day on Crete:

Across the eurozone to Ireland, there are signs that the recent property boom is cooling.

Prices fell by 0.4% last month, but are still almost 15% higher than a year ago -- or over 20% higher in the capital.

  • 11:00 - IRISH RESIDENTIAL PROPERTY PRICES -0.4 PCT M/M IN FEB, UP 14.9 PCT Y/Y
  • 11:00 - RESIDENTIAL PROPERTY PRICES IN DUBLIN -0.7 PCT M/M IN JAN, UP 21.4 PCT Y/Y

Back in the corporate world, a major deal has just been announced.

Consumer giants Heinz and Kraft are being merged, to create the world’s fifth largest food and drinks company.

The deal is orchestrated by Warren Buffett’s Berkshire Hathaway group and Brazilian private equity giant 3G Capital, who together own Heinz.

And what a collection of foodstuffs they bring together:

Updated

More peaceful scenes now in Athens - dancers in traditional dress are performing to the crowds:

Greek Independence Day Parade
.

The livefeed is still running.

Greek Independence Day Parade
Greek Independence Day Parade Photograph: Enikos

The parade is wrapping up, after scores more soldiers have marched past the parliament as Chinook helicopters and jets flashed by above them.

Updated

Back in 2012, Helena wrote about the thorny issue of Greece’s military budget. Worth a reread:

This parade reminds me that Greece spends more on defence, as a percentage of national output, than any other EU member.

And around a quarter of that bill is spent in Germany.

Greek military budget
Greek military budget Photograph: Guardian

Updated

Greek Independence Day Parade
. Photograph: Enikos
Greek Independence Day Parade
. Photograph: Enikos

Scores of marching soldiers continue to stream past the Greek president.

I just spotted Alexis Tsipras watching the parade.

Helicopters can also be spied in the distance, though the Athens rain.

Greek Independence Day Parade
Greek Independence Day Parade Photograph: Enikos

Glad I’m not picking up the fuel bill for this affair.

Fighter jets just whizzed overhead in Athens, as the military parade continues....

There’s a live webfeed of the Athens parade here, showing soldiers marching past president Prokopis Pavlopoulos.

Greek Independence Day Parade
. Photograph: Enikos

Greek motorcycle police are also taking part in the Independence Day march; reigniting memories of clashes with anti-austerity protesters.

Updated

The bad weather in Athens has not deterred people from attending the military parade.

Tanks on the streets of Athens:

File photo dated 22/01/08 of houses in south Derbyshire
.

Back in the UK, mortgage approvals have hit their highest level in five months.

A total of 37,305 new home loans were agreed in February, the British Bankers Association reported, up from 36,517 in January.

That’s a bigger rise than expected. But while activity did pick up last month, it’s still 20% fewer new mortgages than in February 2014 when over 46k were approved.

Updated

Atten-shun! Athens military parade getting underway

Over in Athens our correspondent Helena Smith reports that the military parade is beginning.

First, the newly-installed president of the Greek republic Pavlos Pavlopoulos is laying a wreath before the tomb of the unknown soldier, in front of the Athens parliament.

Helena writes:

For the first time in years barriers will be removed so that spectators can get a better glimpse of the military parade - in this case mechanised units and foot soldiers.

The Greek defence leader and junior party leader Panos Kammenos is pulling out all the stops, allowing ceremonial guards from north to south to participate in the bonanza.

At 10am this morning the cannons went off; three hours earlier I was woken by a military band marching up my street.

The feel-good show has been somewhat doused by heavy rain and is not without controversy. Many are describing the nationalist display as harking backs to the days of the military junta and extremely kitsch.

The centrist To Potami party has denounced the celebrations as being an ill-conceived cover to hide:

“A Greece that hurts her children, who take the road of immigration and joblessness. A Greece that hides its reality under the rug of a mouldy nationalism.”

Updated

The jump in German business confidence also suggests Mario Draghi’s QE programme is helping to stimulate the euro economy.

IFO: German business confidence rises

German companies are more upbeat, the latest survey from the IFO Institute shows, suggesting Europe’s largest economy continues to expand at a fair rate.

IFO’s business climate index has beaten forecasts by rising to 107.9, up from February’s 106.8. Economists expected a reading of 107.3.

Firms are happier about current conditions (this sub-index rose from 111.3 to 112), and also more optimistic about future prospects (up to 103.9 from 102.5).

IFO says the weaker euro, and the lower oil price, are giving German firms a lift; the slide in the exchange rate is giving exporters more confidence about the future, too.

Geopolitical dangers remain the biggest extreme risk nagging at fund managers, according to the latest survey from Bank of America/Merrill Lynch.

Hard to argue with, really....

Updated

The latest twists in the eurozone debt crisis haven’t dented the popularity of Angela Merkel’s Christian Democrats, according to the latest opinion polling:

France’s economy may be turning the corner, according to statistics body INSEE this morning.

INSEE’s business climate index has risen this month, suggesting that firms are more confident about prospects.

It says:

In March 2015, the business climate indicator is improving.

The indicator, compiled from the answers of business managers in the main sectors, has moved upward, from 94 to 96, after being stable during three months. It still lies below its long-term average (100). The business climate indicator has improved by one point in services and by three points in trade.

It is stable in building construction, and has lost one point in manufacturing.

Can Tsipras get agreement on reforms?

Greece’s prime minister has returned to Athens following a two-day trip to Berlin which appears to have improved the tense relations with Germany.

But now, Alexis Tsipras must address concerns within his own party over the reforms which Greece’s creditors are seeking.

The Kathimerini newspaper says that Tsipras will first pitch the package to the party’s political secretariat in the next few days, followed by all of his party’s MPs.

They could object to several potential reforms:

This could include the retention of the contentious ENFIA property tax for another year, albeit adjusted so that the less well-off pay less, as well as labor and pension reforms.

The coalition has already sought to defuse any tension over privatizations by saying that it will only seek strategic partnerships that allow the state to retain a controlling majority.

Lenders also want the special 30 percent reduction on VAT enjoyed by Greece’s islands to be scrapped; another potential flashpoint.

Updated

Europe’s stock markets have opened calmly, as investors await the IFO survey of German business climate in an hour’s time.

The Eurofirst 300 index of leading shares dipped by 0.2%. In London, the FTSE 100 has risen by just 3 points to 7023.

Stan Shamu of IG says:

Europe has been particularly interesting as Germany tries to pull the region out of a slump but some analysts remain concerned that the two-speed economy will not be easily rectified.

Japanese investors are alarmed by the risk of Greece leaving the euro, and Britain leaving the European Union, reports Stephen King, HSBC’s chief economist.

Last night, economists at Deutsche Bank predicted that Greece will run out of funds on April 9th, when it must repay €460m to the IMF, without fresh funds.

They warned that tax revenues so far this year are below target (by around €1bn), and the steady withdrawal of savings is leaving Greek banks worryingly short of liquidity.

Deutsche Bank says:

“Deposit flight has risen to about €400 million on March 18, the highest since the Feb. 20 agreement. The risk of capital controls continues to rise.”

On balance, they still reckon a deal will be reached with Greece’s creditors, but “uncertainty will remain high” in the meantime.

Updated

Brussels officials to discuss Greece today

Flag of the European Union.
.

While Greece proudly marks Independence Day, officials in Brussels will be discussing the state of the reform plan demanded by creditors, and the health of its banking sector.

Officials on the Euro Working Group will hold a teleconference call to discuss how much progress has been made towards a credible economic plan to unlock much-needed bailout funds.

Meanwhile, officials from the ECB will discuss the Greek banking system - and the emergency liquidity keeping it afloat.

Bloomberg has the details:

The European Central Bank Governing Council will hold a weekly call to assess the Emergency Liquidity Assistance keeping Greece’s banking system afloat while euro-area finance ministry officials will have a separate discussion on the progress of the country’s economic policy program.

Without access to capital markets, or the ECB’s normal financing operations, Greek banks rely on almost 70 billion euros ($76 billion) of ELA to cover a financing shortfall exacerbated by steep deposit withdrawals.

While inspectors are gauging the case for continuing financial support for Europe’s most-indebted nation, many Athenians will be watching a parade of battle tanks and fighter jets to mark the beginning in 1821 of the war that won independence from the Ottoman Empire.

The government of George Papandreou scaled down military parades to cut costs after the Greek debt crisis erupted in 2010. Fighter jets made a comeback to the skies of Athens last year at a cost of about 500,000 euros, according to a defense ministry official from the previous administration.

The agenda: Clock ticking on Greek reforms on Independence Day

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

And happy Independence Day to our Greek readers, at home and abroad. Ceremonies are taking place in Greece today to commemorate the events of 1821, when revolutionaries began the battle to overthrow the Ottoman Empire and claim freedom.

Well said, ambassador.

Greece won’t hold back on the celebrations today, with a big military parade planned, including a flypast in Athens.

Yesterday, students marched through the Greek capital to mark the event too.

The main Athens student parade starts on Syntagma Square. Students parade during the celebrations marking the March 25, 1821 anniversary of Greek independence from Ottoman rule. -- Students parade during the celebrations marking the March 25, 1821 anniversary of Greek independence from Ottoman rule. Students all over the country will be holding their parades on Tuesday, followed by a parade of the armed forces on Wednesday at S --- Image by © Alexandros Michailidis/Demotix/Corbis
The main Athens student parade starts on Syntagma Square yesterday. Photograph: Alexandros Michailidis/Demotix/Corbis

But behind the ceremony, Greece is under growing time pressure to come up with credible reforms that will unlock aid from its creditors, before running out of cash sometime in April.

It emerged last night that the European Central Bank’s supervisors has written to Greek banks, instructing them not to buy any more government debt. The FT says the ECB could make the restriction legally binding.

That cuts off a potential source of emergency funding for Athens.

Also coming up today.....

Germany’s IFO institute publishes its latest business climate survey at 9am. That will show whether German firms are benefiting from the weak euro and cheap oil.

At 9.30am, the British Bankers Association reveals how many UK home loans were issued last month.

And this afternoon, we get the latest US durable goods report.

We’ll be tracking all the main events through the day

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