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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (now) and Nick Fletcher

Eurozone finance ministers agree to third Greek bailout - as it happened

Greek Finance Minister Euclid Tsakalotos leaves a euro zone finance ministers meeting in Brussels, Belgium
Greek Finance Minister Euclid Tsakalotos leaves a euro zone finance ministers meeting in Brussels, Belgium Photograph: Francois Lenoir/Reuters

And finally, over to Ian Traynor in Brussels to sum up tonight’s news:

Greece clinched a three-year bailout worth €86bn (£60bn) after parliamentarians in Athens backed the deal, and Germany backed down on its opposition to the third rescue of the bankrupt country in five years.

A meeting of eurozone finance ministers in Brussels representing the country’s main creditors agreed to launch the new bailout with €26bn being disbursed next week following six months of bitter recrimination that almost saw the country, under the leftwing government of Alexis Tsipras, becoming the first to exit the single currency.

The meeting was upbeat about finalising the bailout terms after Tsipras, secured approval from MPs for a huge package of legislation on Friday morning. The vote committed the indebted country to radical economic and fiscal reforms needed to secure the rescue money.

Wolfgang Schäuble, the German finance minister and critic of the proposed new deal, toned down his reservations at a meeting of his eurozone peers in Brussels several hours after the Athens vote.

Over the past week, Berlin has consistently argued against being rushed into a new bailout, preferring to award Greece a new bridging loan to pay off a debt payment of €3.2bn due to the European Central Bank next week. But the temporary loans scenario was barely mentioned by finance ministers.

“The past six months have been difficult. We have looked into the abyss,” said Jean-Claude Juncker, the president of the European commission. “But today the message of today’s Eurogroup is loud and clear: on this basis, Greece is and will irreversibly remain a member of the Euro area.”

In an abrupt change of tone, the leaders paid tribute to Tsipras, who could only win the vote on the new bailout with the support of the opposition and by splitting his leftwing Syriza movement. It is now likely that Tsipras will call early elections and trigger a realignment of Greek politics......

More here:

And that is a good moment to stop for the night. Thanks for reading and commenting, See you all next week. GW

Tonight’s deal faces a trio of major obstacles - one political, one economic, and one financial.

The Wall Street Journal explains:

Large-scale defections from Syriza party lawmakers during a parliamentary vote on the agreement Friday morning indicate that Prime Minister Alexis Tsipas may soon call new elections.

That could once again delay the implementation of the austerity measures mandated by the deal as well as action by the other eurozone countries to lower Greece’s debt load.

At the same time, the steep budget cuts Greece has to implement in return for the new bailout are bound to cause more pain for its economy and citizens. The rescue program foresees a 2.3% contraction of Greece’s gross domestic product this year, followed by a 1.3% decrease next year.

The deal also expects that shareholders, junior creditors and senior bondholders in Greece’s battered banks will take losses before the lenders will be recapitalized. That will likely cause further uncertainty for a financial sector already reeling from capital controls that are unlikely to be lifted anytime soon.

European Commission President Jean-Claude Juncker must be relieved that the threat of Greece leaving the eurozone on his watch has receded.

Here’s his reaction to tonight’s agreement.

The past six months have been difficult. They have tested the patience of policy-makers and they have tested the patience of our citizens even more. Together, we have looked into the abyss.

But today, I am glad to say that all sides have respected their commitments,”

More reaction to tonight’s agreement:

Updated

Summary: what was agreed tonight

Tonight’s deal doesn’t mean the third Greek bailout is totally “in the bag”. Some national parliaments need to give their approval - including Germany’s Bundestag next week.

But short of a major shock, the €86bn bailout package is finally a done deal, after nearly seven months of wrangling, deadlock and drama.

So what are the key points of the deal?

Well, the Memorandum of Understanding (MoU) between Athens and its creditors includes four key elements -- including some very stretching budget targets, unpopular economic reforms. including to pensions,, and sweeping changes to a banking sector that has been battered this year.

Or, in the eurogroup’s words:

  • a medium-term target for a primary surplus of 3.5% of GDP by 2018 to be achieved through fiscal reform
  • an ambitious reform of the pension system
  • key labour and product market reforms to open up the economy to investment and competition
  • financial sector measures to safeguard its stability, including a recapitalisation of the banks and urgent steps to tackle the non-performing loan (NPL) problem in the banking sector

There is also a new pledge to privatise Greek state assets, through a new controversial fund that is designed to raise up to €50bn.

In return, Greece gets the promise of new measures to guarantee debt sustainability. Prime minister Tsipras has repeatedly hailed that commitment as a (rare) key victory.

But Europe has not committed to actually cutting Greece’s debt mountain. Instead, it argues that:

debt sustainability can be achieved through a far-reaching and credible reform programme and additional debt related measures without nominal haircuts.

In other words, by giving Greece longer to repay its existing loans and cutting the interest rates charged.

Although ministers have also dangled a carrot:

If necessary, the Eurogroup stands ready to consider, possible additional measures to ensure that Greece’s gross financing needs remain at a sustainable level.

And debt sustainability is vital, to get the IMF on board (as well as to help Greece).

But after two Greek bailouts, the Fund hasn’t yet committed to a third. First, it wants to see proof that Greece has implemented all the fiscal, structural and financial sector reforms on the table. Plus an agreement on possible debt relief to ensure debt sustainability.

It could be a dramatic autumn.....

Greek Finance Minister Euclid Tsakalotos answers journalists after a meeting of the Eurogroup on Greece at the European Union headquarters in Brussels on August 14, 2015. Eurozone finance ministers approved Friday a third debt bailout worth up to 86 billion euros to keep Greece afloat and avoid its chaotic exit from the single currency bloc, officials said. AFP PHOTO/ JOHN THYSJOHN THYS/AFP/Getty Images
Greek Finance Minister Euclid Tsakalotos speaking to reporters tonight Photograph: John Thys/AFP/Getty Images

The success of tonight’s deal depends on Greece’s willingness to embrace tough reforms, Tsakalotos added.

Greece’s finance minister, Euclid Tsakalotos must be cream-crackered this evening.

He spent last night in the Athens parliament, as MPs argued over whether to approve the bailout programme. No sooner was that vote over than he was preparing for the eurogroup meeting, which began after lunch in Brussels.

But he’s still managed to raise the energy to speak with reporters tonight, and argue that tonight’s deal can help Greece recover.

Tsakalotos explained:

“It takes Greece forward in the sense that the financial system should be much more stable from now onwards. There is a promise of recapitalisation of the banks, without any of the depositors having to bail in or anything to worry about.”

If you’ve been following this crisis, you’ll already know that Greece must implement sweeping economic changes in return for this third package of loans.

The broad scope of the plan was agreed a month ago, at the summit of eurozone leaders.

And as we reported earlier this week, the final deal includes “major reforms of health, welfare, pensions and taxation systems, alongside more ambitious privatisation schemes.”

It also awards the troika decisive influence over reforms to Greece’s banks, which have suffered major capital outflows this year, culminating in capital controls since late June.

Some tweaks have been agreed tonight, but this story from Wednesday night still gives the picture:

Schäuble denies that the political instability in Greece could doom tonight’s deal.

He points out that prime minister Alexis Tsipras has fought hard to get MPs to approve it:

(The Greek parliament gave its seal of approval to the deal early this morning - but Tsipras suffered a significant rebellion among his own MPs).

Even Schäuble, one of Greece’s biggest critics, sounds optimistic tonight.

Germany’s finance minister tells reporters that he’s confident that eurozone ministers can agree a “common approach to Greek debt sustainability”in October, which would then bring the IMF on board.

Wolfgang Schauble, Germany’s finance minister, is briefing the press -- here’s a livefeed.

Eurozone finance ministers are racing to brief the press, and give their verdict on the Greek bailout deal reached tonight.

France’s Michel Sapin has hailed the deal, and applauded the determination shown by the Greek government to carry out reforms (after a shaky start).

Lagarde repeats call for Greek debt relief

With delicious timing, IMF chief Christine Lagarde has just issued a statement welcoming the agreement between Greece and the rest of the eurozone.

But she has also warned that “significant” debt relief is needed before the IMF can join the bailout (as many countries, including Germany and Finland, demand).

Updated

I’m hopeful that the IMF will come on board in October, Dijsselbloem says.

But he admits that this isn’t guaranteed; it all depends on Greece’s ability to implement the programme, and the eurozone’s progress on debt sustainability.

And that’s the end of the press conference....

Dijsselbloem repeats that relations with the Athens government has improved in recent weeks.

Greece has been ‘very strong, very organised’, he says, in a clear dig at their former finance minister.

Our Europe editor, Ian Traynor, seeks details about how tonight’s deal differs from the draft proposal drawn up this week.

Jeroen Dijsselbloem confirms that tonight’s statement includes an new, explicit commitment that bank depositors won’t be bailed-in to help pay the cost of rescuing Greece’s banks.

Ministers added that commitment tonight because they want to avoid panic that savers could lose money.

Updated

Onto questions.

Are the eurogroup concerned by the political instability in Greece, and the prospect of a confidence vote next week?

Jeroen Dijsselbloem says that the Athens parliament has approved the Greek bailout plan by a large majority, showing there is sufficient “ownership” of the plan.

But much of the majority comes from opposition parties, isn’t that a worry?

No, Dijsselbloem replies - it’s an encouraging sign.

Eurozone authorities are aiming to sign off Greece’s first loan tranche, worth €26bn, next Wednesday (19th August).

Then, €13bn will be handed over early on Thursday. That will cover repaying Greece’s existing bridge loan (to meet July’s funding needs) and its bond repayment due to the ECB on the 20th.

Another €3bn will be disbursed during the autumn.

A further €10bn of funds are being set aside to cover the cost of recapitalising Greece’s banks. But that money won’t be handed to Athens, says Klaus Regling, the head of the ESM.

Instead, it will be retained in Luxembourg and handed over when requested.

Updated

Greece’s willingness to reform its pension system will be crucial to the IMF’s decision on whether to take part in the bailout, Dijsselbloem adds.

What about the thorny question of the International Monetary Fund’s involvement in the bailout?

Dijsselbloem says that it is essential that the IMF is involved. That could happen, he says, once the Fund is satisfied by the Greek reforms and the prospects of debt sustainability.

Updated

Eurozone ministers have agreed to consider taking “additional measures” to ensure Greece’s debt sustainability, Eurogroup president Dijsselbloem says.

However, Athens will need to achieve a successful first review of the bailout programme first.

And debt relief may not include haircuts on Greece’s debt pile, he adds.

Updated

From left, European Commissioner Valdis Dombrovskis, Dutch Finance Minister and Chairman of the Eurogroup Jeroen Dijsselbloem, and Managing Director of the European Stability Mechanism Klaus Regling at tonight’s press conference.
From left, European Commissioner Valdis Dombrovskis, Dutch Finance Minister and Chairman of the Eurogroup Jeroen Dijsselbloem, and Managing Director of the European Stability Mechanism Klaus Regling at tonight’s press conference. Photograph: Francois Walschaerts/AP

The €86bn bailout includes a €25bn buffer to recapitalise the Greek banking sector.

Updated

Dijsselbloem: Greek bondholders face bail-in

Tonight’s deal also tackles issues in the Greek banking sector, Dijsselbloem says, to recapitalise lenders.

And he reveals that senior bondholders could be bailed-in to help pay for the plan, although depositors will be protected.

Dijsselbloem: We have a deal!

We have come to a positive conclusion tonight, says Jeroen Dijsselbloem at the start of the press conference.

We have reached a political deal, and solved the last issues, he tells reporters in Brussels.

That means Greece’s third bailout, worth around 86 billion euros, is agreed!

Dijsselbloem also pays tribute to the Greek government’s recent efforts to help create the deal.

Watch tonight's press conferences here:

Here’s a livefeed of eurogroup president Jeroen Dijsselbloem announcing the result of tonight’s meeting, starting any moment.....

 

Updated

Belgium’s finance minister, Johan Van Overtveldt, has told Reuters that the eurogroup have agreed to implement the Greek bailout plan that was drawn up this week, but with some “additional measures”.

Updated

Eurogroup meeting ends

Ian confirms that tonight’s meeting has finished, so we should find out very soon what’s been agreed.

The newswires are reporting that the Eurogroup meeting on Greece has just ended......

It’s a glamorous gig, covering the biggest financial crisis in generations.....

From Brussels, our Europe editor Ian Traynor sums up the situation tonight:

Greece is close to clinching a three-year bailout worth more than €85bn (£60bn) after parliamentarians in Athens backed the deal and Germany sent conciliatory signals ahead of a crucial meeting of eurozone finance ministers.

Representatives of Greece’s main European creditors were generally upbeat about finalising the bailout terms after the Greek prime minister, Alexis Tsipras, secured approval from MPs for a huge package of legislation on Friday morning. The vote committed the indebted country to radical economic and fiscal reforms needed to secure the rescue money.

Wolfgang Schäuble, the German finance minister and the main critic of the proposed new deal, toned down his reservations at a meeting of his eurozone peers in Brussels several hours after the Athens vote on Friday, voicing optimism that ministers would back a deal.

“I’m actually quite confident that we can reach an agreement,” Schäuble said.

Eurogroup Finance ministers meeting on the Greek bailout<br>epa04883369 German Finance Minister Wolfgang Schauble speaks to media prior to a special Eurogroup Finance ministers meeting, on the Greek crisis, at the European Council headquarters in Brussels, Belgium, 14 August 2015. Greeks members of Parliament have approved on 14 August the third bailout agreement in five years with European Union. EPA/JULIEN WARNAND

Over the past week, Berlin has consistently argued against being “rushed” into a new bailout, preferring to award Greece a new bridging loan to pay off a debt payment of €3.2bn due to the European Central Bank next week. But the temporary loans scenario was barely mentioned by finance ministers as they arrived in Brussels, including the northern and east European eurozone members who have been reluctant to do a deal....

Here’s Ian’s full story:

Ian’s also heard that the IMF’s managing director, Christine Lagarde, gave an upbeat briefing to the assembled eurozone ministers:

Here’s a few more photos from inside the Eurogroup meeting:

Extraordinary Eurogroup meeting on Greece<br>14 Aug 2015, Brussels, Belgium --- Brussels, Belgium. 14th August 2015 -- Greek Finance Minister Euclid Tsakalotos (R) and Eurogroup President Jeroen Dijsselbloem (L) shaking hands at the extraordinary Eurogroup meeting on Greece. -- Extraordinary Eurogroup meeting on Greece in Brussels, Members of the Greek Parliament earlier on 14 August have approved on the third bailout agreement in five years with European Union. --- Image by © Jonathan Raa/Demotix/Corbis
Greek Finance Minister Euclid Tsakalotos (right) and Eurogroup President Jeroen Dijsselbloem (L) share a cheerful greeting. Photograph: Jonathan Raa/Demotix/Corbis
Eurogroup meeting at the EU headquarters in Brussels, Belgium - 14 Aug 2015<br>Mandatory Credit: Photo by Isopix/REX Shutterstock (4962696v) Wolfgang Schauble, Michel Sapin Eurogroup meeting at the EU headquarters in Brussels, Belgium - 14 Aug 2015 Extraordinary meeting of the Eurozone finance ministers on Greece
It’s not clear why France’s Michel Sapin is pointing at Germany’s Wolfgang Schauble..... Photograph: Isopix/REX Shutterstock/Isopix/REX Shutterstock
Eurogroup meeting at the EU headquarters in Brussels, Belgium - 14 Aug 2015<br>Mandatory Credit: Photo by Isopix/REX Shutterstock (4962696ab) Euclid Tsakalotos, Michel Sapin Eurogroup meeting at the EU headquarters in Brussels, Belgium - 14 Aug 2015 Extraordinary meeting of the Eurozone finance ministers on Greece
...but clearly he enjoys it. Photograph: Isopix/REX Shutterstock/Isopix/REX Shutterstock

Eurozone finance ministers are getting closer to a deal on the Greek bailout.

They’ve just taken a short break, and are now hammering out a statement. Officials are briefing that the eurogroup could finish in a little over two hours time, at 10pm (9pm BST or 11pm in Athens).

Greek prime minister Alexis Tsipras may try and reinvent himself to win any forthcoming election, says our correspondent Helena Smith.

New Greek elections could come as early as next month, if prime minister Alexis Tsipras calls and loses a confidence vote next week, writes Jon Henley. But Tsipras may well win in any new ballot.

Updated

Here’s more on what may be on the table:

European markets slip back

As the Eurogroup of finance minsters meet to discuss the third Greek bailout proposals, European markets ended the week on a downbeat note. Despite some measure of calm returning following the ructions caused by China devaluing its currency, investors remained nervous. Weaker than expected eurozone GDP data proved a drag on markets, although some positive US industrial production figures provided some support. The final scores showed:

  • The FTSE 100 finished down 17.59 points or 0.27% at 6550.74
  • Germany’s Dax dropped 0.27% to 10,985.14
  • France’s Cac closed 0.61% lower at 4956.47
  • Italy’s FTSE MIB fell 0.46% to 23,248.52
  • Spain’s Ibex ended 0.63% at 10,879.3
  • The Athens market lost 1.85% to 673.93

On Wall Street the Dow Jones Industrial Average is currently 40 points or 0.24% higher.

Updated

Meanwhile here is more from the interview with European Central Bank member Benoît Cœuré, in which he suggests the bank may allow Greek bonds to be accepted as collateral once the new bailout agreement is in place.

Will the Governing Council of the ECB immediately reapply the waiver – i.e. the exemption under which the bonds of a country with a poor credit rating are accepted as collateral if the country is in a programme – once Greece’s third programme is agreed? That would be an enormous help to Greece.

The Governing Council has not yet discussed that.

But it is not automatic?

In order for a country to benefit from the waiver, a programme needs to be in place, and that programme needs to be functioning well. Once we have reached that point, we will discuss it in the Governing Council.

But does the Governing Council not need to wait for the initial assessment by the creditors, which is scheduled for October? That is also relevant as regards the question of when Greece could benefit from the ECB’s bond purchase – i.e. quantitative easing (QE) – programme.

We could potentially act earlier. Greece’s new programme contains a large number of “prior actions”. The question for the Governing Council will be whether these preliminary measures are sufficient to meet our criteria.

Greek officials are saying the Euro Working Group went well and it recommended to the Eurogroup of finance ministers that the country receive €13bn immediately to cover its financing needs, with another €10bn to help support the banks.

Updated

Capital controls unlikely until Greek banks recapitalised - ECB's Cœuré

European Central Bank member Benoît Cœuré has expressed optimism about the success of a third bailout deal for Greece.

In an interview with Börsen-Zeitung he said:

This year has seen a lot of trust destroyed, and reforms have been reversed. That has been a real setback. But Greece can build on what it has achieved under the first two programmes, and the new memorandum of understanding has everything it needs to give the Greek economy considerable support. I would like to stress two things in this regard. First, we have the right mix as regards fiscal measures. Ambitious medium-term budgetary objectives have been set, without the economy being strangled in the short term. Second, there is a strong focus on structural reforms. Looking back, one could say that if there had been more focus on structural measures – such as the reform and opening-up of markets, improved tax collection and the fight against interest groups – from the start, that would have reduced the burden that adjustment placed on the most vulnerable in society and speeded up Greece’s recovery.

And in what could be seen as a dig at former Greek finance minister Yanis Varoufakis, he said:

I am grateful for the good spirit and cooperation of the new Greek Finance Minister.

On Greek banks he said it was not clear how much funding they would need:

We believe that the recapitalisation of the Greek banks should take place as soon as possible. The banks’ ability to grant credit is an important precondition for growth. However, first we need detailed information about the situation. For that reason, banking supervisors at the ECB have started a new asset quality review and stress test for Greece’s four major banks. Those credit institutions were adequately capitalised , but they are now operating in an extremely difficult economic environment, and nonperforming loans are likely to increase in the next few years. It is quite clear, therefore, that the banks will require more capital. How much remains to be seen.

He said any decision about lifting capital controls was not one for the ECB, but should not happen until the banks are recapitalised:

It is a matter for the Greek government. As long as there is uncertainty regarding the future of Greece’s banks, the government in Athens should tread very carefully. I do not see scope for substantially relaxing Greece’s capital controls until it is clear how and when the banks will be recapitalised.

He was also asked about whether the diverging views within the eurozone could ultimately lead to it breaking up:

We have to be careful here, as that can quickly become a self-fulfilling prophecy. The more you talk about it, the more people think nationalistically again and stop trusting Europe – and when people do not trust Europe, Europe becomes part of the problem instead of being part of the solution. Europe has always thrived on the diversity of its models, ideas and cultures. We need to prevent economic divergence from becoming so large that it threatens the survival of the euro area. But diversity as such is not a bad thing; it also promotes best practices and competition.


Updated

Away from the eurozone briefly, and US consumer confidence figures have come in weaker than expected.

The University of Michigan’s preliminary consumer sentiment index came in at 92.9 for August, down from a final reading of 93.1 for July and forecasts of a rise to 93.5.

But other data was more positive for economic growth. Producer prices rose for the third month in a row in July while industrial output climbed at its strongest pace for eight months.

Updated

I didn’t spot Greece’s finance minister, Euclid Tsakalotos, arriving at the Eurogroup meeting -- but he is there now.

Greece’s Finance Minister Euclid Tsakalotos attends an extraordinary Eurogroup meeting on Greece at the European Council in Brussels, on August 14, 2015. Eurozone finance ministers gathered in Brussels for crucial talks on approving a huge bailout for Greece designed to save the country from financial collapse and a chaotic exit from the euro. AFP PHOTO/EMMANUEL DUNAND EMMANUEL DUNAND/AFP/Getty Images

Tsakalotos can’t have had much sleep, given he spent last night in the Athens parliament arguing over the bailout deal (the vote didn’t end until after 10am local time).

More photos from the meeting:

Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem (C) speaks with officials during an Eurogroup meeting at the EU headquarters in Brussels, on August 14, 2015. Eurozone finance ministers were scheduled Friday to go over a new bailout programme in return for reforms by Greece, but some of the creditors feel Athens’ pledges are not precise enough. AFP PHOTO / JOHN THYSJOHN THYS/AFP/Getty Images
Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem (C) speaks with officials. Photograph: John Thys/AFP/Getty Images
Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem (L) welcomes Slovakia’s Finance Minister Peter Kazimir (CR) during an Eurogroup meeting at the EU headquarters in Brussels, on August 14, 2015. Eurozone finance ministers were scheduled Friday to go over a new bailout programme in return for reforms by Greece, but some of the creditors feel Athens’ pledges are not precise enough. AFP PHOTO / JOHN THYSJOHN THYS/AFP/Getty Images
Dijsselbloem welcomes Slovakia’s Finance Minister Peter Kazimir (standing). Photograph: John Thys/AFP/Getty Images
German Finance Minister Wolfgang Schauble reads a documents as he attends an extraordinary Eurogroup meeting on Greece at the European Council in Brussels, August 14, 2015. Eurozone finance ministers are going over a new bailout programme in return for reforms by Greece, but some of the creditors feel Athens’ pledges are not precise enough. AFP PHOTO/ EMMANUEL DUNANDEMMANUEL DUNAND/AFP/Getty Images
German Finance Minister Wolfgang Schäuble reads documents. Photograph: Emmanuel Dunand/AFP/Getty Images

That’s it. The Eurogroup meeting is now underway, with most ministers expressing confidence that the third Greek bailout will be signed off today.

Stubb: IMF involvment is a Catch-22 problem

Alex Stubb

Finland’s Alex Stubb has now arrived at the eurogroup meeting, and told reporters that he would be “very surprised” if a deal isn’t reached to approve the Greek bailout deal today.

There are some ‘nitty gritty issues’ to solve today, including the involvement of the IMF in the Greek bailout, the size of the first bailout programme, and the timing of the financing.

Stubb adds that Finland is “very much” aligned with German on the need to involve the International Monetary Fund -- and puts his finger on the problem:

We should be honest and open that there is a bit of a Catch-22 to solve here.

The IMF will be involved only with debt relief, and we want the IMF to be involved but we don’t want debt relief. So some kind of solution will have to be found.

That solution could be a declaration from the IMF, which also refers to debt relief, he adds.

Updated

Slovakia’s Peter Kazimir adds that Greece must fulfil its commitments before it can get any debt relief:

Slovakia’s finance minister, Peter Kazimir, tells reporters he agrees with Wolfgang Schäuble:

Updated

Schäuble: IMF must be involved in Greek bailout

Wolfgang Schauble

Germany’s Wolfgang Schäuble just arrived, giving reporters a cheery smile and a few words in German.

Schäuble says he is confident that a deal will be reached today. But he also warns that the IMF must be involved in the new Greek bailout, otherwise Germany can’t back the plan.

The question of the IMF’s involvement isn’t clear, though, given that the Fund insists that Greece needs serious, and “dramatic” debt relief.

European countries haven’t made such bold commitments yet, and won’t discuss debt relief in detail until October.

As our financial editor Nils Pratley explains:

There will....be heavy pressure from Germany to compromise and dilute the debt relief. It will be hard to get any bailout package through the German parliament but the task might be impossible if the IMF won’t endorse it.

Nevertheless, the IMF should stick to its guns. Greece needs serious debt relief, not token measures. It is about time that lenders accepted the economic reality that piecemeal measures are pointless when debt ratios reach 200%.

Malta’s Edward Scicluna is next to arrive -- he tells the press pack that he favours reprofiling Greece’s debt (eg, extending payback dates) rather than a haircut on the face value.

And do you expect a short meeting, or a long one?

What I wish for, is that it’s not too long, Scicluna smiles hopefully.

Amen to that.

Next up, Pierre Gramegna of Luxembourg, who greets reporters in Brussels with a cheerful “good morning” (?!).

Sounding positive, Gramegna says Greece has made more progress in the last month than in the previous six months, and is hopeful that the bailout is approved today.

Updated

Dijsselbloem then vanished into the building, swiftly followed by ECB president Mario Draghi (showing his usual skill at avoiding the press pack)

Jeroen Dijsselbloem and Mario Draghi
Jeroen Dijsselbloem and Mario Draghi Photograph: EbS

Dijsselbloem predicts Eurogroup criticism over Greek bailout deal

Eurogroup president Jeroen Dijsselbloem has just arrived at today’s extraordinary Eurogroup meeting.

Like France’s Michel Sapin, Dijsselbloem is looking tanned and cheerful.

Jeroen Dijsselbloem

But he warns that today’s meeting won’t be short.

Some ministers will have questions, and criticism, on some issues, he predicts, adding:

Hopefully at the end of the evening we will have a positive outcome.

What about debt sustainability?

Debt sustainability is still a major point of concern, certainly for the IMF, Dijsselbloem replies. We will look at it closely in October.

Hopefully we can make sure that it is sustainable by them, and make further guarantees if necessary, so that the IMF can come on board in October, because that’s very important to all of us.

IMF involvement is particularly important for Germany, of course.....

Updated

Finnish finance minister Alex Stubb has dropped a hint that today’s Eurogroup meeting will go smoothly:

The EPP is the group of centre-right European political parties, so Stubb should be conferring with finance ministers from Germany, Ireland, Portugal and Spain.

Sapin: Greek debt relief will be discussed in the autumn.

And we’re off! The first ministerial car has arrived in Brussels, and a suntanned looking French finance minister has got out.

Michel Sapin

Michel Sapin told reporters that today’s Eurogroup meeting follows “very important” work by Greece and the institutions (the Europe Commission, European Central Bank, IMF and European Stability Mechanism).

Our task today is to decide whether to approve the Greek deal, Sapin adds - the issue of debt reprofiling will be covered in the autumn (ie, not today).

Jeroen Dijsselbloem will speak to the Brussels press in an hour’s time, before the eurogroup meeting gets underway.

This morning’s weak eurozone growth figures have pushed stock markets into the red today.

The main indices have all lost ground, as investors show disappointment at the slowdown in Germany and France.

European stock market, August 14 2015

Connor Campbell of SpreadEx explains:

A swathe of disappointing GDP figures from across the Eurozone led to a weaker than expected region-wide number this Friday morning. This merely served to compound the current lack of appetite for risk and caused the DAX and CAC to lose their tentative gains in the process.

That could change this afternoon, however, dependent on how swift, and successful, the Eurogroup meeting is. The finance ministers are all on their way to Brussels, so sooner rather than later news should start leaking out about the sentiment of the group.

Flash crash trader granted bail

Breaking away from the eurozone briefly, the British financial trader accused of helping trigger a multibillion-dollar US stock market crash has, finally, been granted bail.

Westminster magistrates court has ruled that Navinder Singh Sarao should be released from custody, almost four months after being arrested and accused of sparking market turmoil in 2010.

Sarao won’t be allowed to leave the London area, though, reports my colleague Jennifer Rankin from court. He’s fighting efforts to be extradited to the US to face charges.

Updated

Dutch ministers discuss Greek bailout, The Hague, The Netherlands - 16 Jul 2015<br>Mandatory Credit: Photo by Hoogte/REX Shutterstock (4904706f) Minister of Finance Jeroen Dijsselbloem Dutch ministers discuss Greek bailout, The Hague, The Netherlands - 16 Jul 2015
Photograph: Hoogte/REX Shutterstock/Hoogte/REX Shutterstock

Dutch finance minister Jeroen Dijsselbloem has welcomed the Greek parliament’s vote today.

Dijsselbloem, who will chair this afternoon’s Eurogroup meeting, told reporters in The Hague that the current plan is the “strongest and most concrete” agreed yet.

Eurozone ministers will need to be confident, though, that Greece will meet its commitments, he added (via Reuters).

Those ministers should start arriving in Brussels soon.

Analysts at Capital Economics fear that the eurozone economy will continue to slow through 2015, and only grow by 1% during the year.

They say:

“Looking ahead, business surveys suggest that the euro zone economy will continue to expand, led by strong growth in Spain and a solid German economy. But they offer little hope that the recovery will gain pace.”

“Indeed, we think it is more likely that growth in the region as a whole will slow further in the second half of the year.”

Finland was the worst-performing member of the eurozone in the last quarter; the only country to suffer shrinking GDP.

But it wasn’t the only poor performer, with France stagnating, Austria and the Netherlands growing just 0.1%, and Italy at +0.2%.

Here’s the full details:

Eurozone GDP, Q2 2015, the details
Eurozone GDP, Q2 2015, the details Photograph: Eurostat

Euro economy grew by 0.3% in the last quarter

The eurozone economy grew by 0.3% in the second quarter of 2015, weaker than the 0.4% expected.

That’s not a surprise, after growth figures from Germany, France, Italy and the Netherlands were all weaker than forecast (as covered earlier in today’s blog).

But it underlines that the eurozone recovery is nothing to shout about, particularly with the French economy dropping back into stagnation.

In contrast, the UK economy grew by 0.7% during the second quarter of the year, while the US expanded by 0.6%.

Eurozone GDP

Readers who missed the all-night drama in the Greek parliament in favour of a good night’s sleep can get a flavour from this video:

Video: Greek bailout debate

Updated

Portugal has outperformed France and Italy, and matched Germany, with growth of 0.4% in the last three months.

How the Syriza rebellion gathered pace:

Today’s vote was the third time that Greek MPs have been asked to approve the third bailout, and each time Alexis Tsipras’s majority has been whittled away.

Damian Mac Con Uladh of the Irish Times has been maintaining a spreadsheet showing how the rebellion has gathered pace.

As you can see, seven previously loyal members decided to abstain today, leaving Tsipras reliant on opposition MPs to get the bailout approved.

And that’s why Greece could be heading into snap elections, unless some of these rebels return to the fold in a confidence vote.

Eurozone finance ministers will soon be heading to Brussels for a eurogroup meeting, to sign off the €85bn Greek bailout deal.

Finland’s Alex Stubb is already on his way:

Awfully pretty, and still stuck in a pretty awful recession.

Updated

Italian economy grows by just 0.2%

Flag of Italy, full frame

Italy has just provided further confirmation that the eurozone economy has underperformed in the last quarter.

Italian GDP rose by 0.2% quarter-on-quarter in April-June, below the 0.3% which had been expected.

That’s a quartet of disappointment. With Germany, France, Italy and the Netherlands all missing expectations, it’s very hard to see how the eurozone grew by the 0.4% which analysts expected.

Back in Athens, Greek MPs are staggering into the daylight after their marathon session.

It was touch-and-go at one stage, though. After the result was declared, speaker Zoe Konstantopoulou announced that the vote wasn’t legally valid and should be rerun within 24 hours.

The Netherlands economy has also missed expectations.

Dutch GDP grew by just 0.1% in the last quarter, compared to estimates of 0.3%.

The prospect of snap Greek elections this autumn will not please German MPs, who must give their approval to the deal next week:

If you’re just tuning in, here’s Jon Henley’s latest news story on the bailout vote:

Tsipras to call confidence vote after bailout rebellion

Skai TV are reporting that Alexis Tsipras will call a vote of confidence sometime after August 20, which would lead to snap elections if he loses.

And that’s because the Greek PM has suffered a significant rebellion among his own MPs at today’s vote.

According to one calculation, just 118 government MPs voted to approve the bailout plan - below the 120 votes needed to maintain Tsipras’s majority.

Updated

Here’s the voting details:

Crisis-watcher Yannis Koutsomitis reckons the Greek government will just retain its majority in today’s vote, but it will be close:

Updated

Greece approves third bailout deal

It’s official: a majority of Greek MPs have voted to back the third aid programme.

But more government MPs are defying Alexis Tsipras and voting no -- meaning he could still lose his parliamentary majority.

Updated

Halfway through the vote, and 105 Greek MPs have now voted Yes, with 32 voting No and five abstaining.

The Greek parliament is on track to approve the third bailout deal, as the main opposition parties are supporting it:

Yanis Varoufakis has stuck to his word and voted against accepting the third bailout plan. Other Syriza rebels are also voting ‘No’.

Updated

Finally, Greek MPs are voting on whether to accept the third bailout.

My colleague in Athens, Jon Henley, has watched the Greek bailout debate - and reports on the serious disunity on display:

The Athens parliament did not start debating the 400-page taxt of the draft bailout plan until nearly 4am after parliamentary speaker Zoe Konstantopoulou, a Syriza hardliner, ignored Tsipras’s request to speed up proceedings and instead raised a lengthy series of procedural questions and objections.

In angry exchanges, the conservative opposition rounded on the government, warning it not to take its support for granted. “If you want to provoke us - and for us to vote for it - you can’t have it both ways,” New Democracy leader Vangelis Meimarakis told finance minister Euclid Tsakalotos.

On the left, former energy minister Panayiotis Lafazanis, who leads a rebel bloc of around a quarter of Syriza’s 149 MPs, pledged to “smash the eurozone dictatorship”, while in her concluding pre-vote remarks, Konstantopoulou announced: “I am not going to support the prime minister any more.”

Earlier, the government spokeswoman, Olga Gerovasili, conceded divisions within the leftist party, which swept to victory in January’s elections on a staunch anti-austerity platform, were now so deep that a formal split was probably inevitable. Tsipras could call fresh elections as early as next month.

And here are some photos from the all-night session:

Greek Finance Minister Euclid Tsakalotos reacts as deputies attempt to disrupt his speech during a night parliamentary session in Athens, Greece, early August 14, 2015. Greek lawmakers debated a draft bill on the latest bailout deal, which the government hopes will be approved ahead of a euro zone finance ministers meeting in Brussels on Friday. REUTERS/Christian Hartmann TPX IMAGES OF THE DAY
Greek Finance Minister Euclid Tsakalotos. Photograph: Christian Hartmann/Reuters
Panagiotis Lafazanis
Panagiotis Lafazanis. Photograph: Yiannis Liakos/AP
Greek Parliament Speaker Zoe Konstantopoulou attends a parliamentary session in Athens, Greece, early August 14, 2015. Greek lawmakers bickered through the night over a new bailout deal to keep the country afloat, only hours before euro zone finance ministers are due to decide on Friday whether to approve the vital aid for Athens. REUTERS/Christian Hartmann
Greek Parliament Speaker Zoe Konstantopoulou. Photograph: Christian Hartmann/Reuters

Updated

Finland's recession continues

ca. 1990s, Helsinki, Finland --- Scandinavian Flags --- Image by Joel W. Rogers/CORBIS

There is no end to the economic gloom in Finland, where GDP has shrunk again.

Reuters has the details:

Finland’s gross domestic product (GDP) contracted 0.4% in the second quarter from the previous quarter, preliminary data from the statistics office showed on Friday. GDP fell 0.1% quarterly in the first quarter.

Second-quarter GDP was 1.0% lower than the same period a year earlier.

In June, output fell 0.9% compared with a year earlier, the statistics office said. The Finnish economy has contracted for three years in a row.

Updated

Yanis Varoufakis: I can't back the bailout

More drama in the Athens parliament, as the all-night debate continues.

Former finance minister Yanis Varoufakis has just intervened, telling the chamber that he cannot vote for the bailout deal. But he still supports the government, so suggests that he should resign as an MP to allow Tsipras to appoint a successor.

Updated

German GDP misses forecasts

German flag

Germany’s latest growth figures are also weaker than expected.

The eurozone’s powerhouse economy grew by just 0.4% in April-June, slightly below the 0.5% which economists had forecast.

That, plus France’s disappointing figures, suggests growth in the eurozone will miss the 0.4% which the City expected.

Back in Athens, Tsipras has warned MPs that they must give their approval to the bailout plan today - so Greece can get the money to repay the European Central Bank next week.

French economy stagnated in Q2

France has got Eurozone GDP Day off to a bad start, by posting no growth in the last three months.

France’s economic output was unchanged in the April-June quarter, stats body INSEE just reported. That’s weaker than the 0.2% which analysts had expected.

Household spending slowed, while French firm continued to cut investment. On the positive side, exports grew by 1.7%.

French GDP. Q2 2015
Photograph: INSEE

Tsipras: I don't regret compromising.

Debate in Greek Parliament over new bailout memorandum<br>14 Aug 2015, Athens, Attica, Greece --- Athens, Greece. 14th August 2015 -- Prime Minister Alexis Tsipras attends a meeting at the Greek Parliament over the country’s new bailout memorandum. -- A debate was held in the Greek Parliament on the technical memorandum of understanding between the Greek Government and the ESM, ECB, EU and IMF for the third credit bailout package for the country. --- Image by © Wassilis Aswestopoulos/Demotix/Corbis

Alexis Tsipras is telling bleary-eyed Greek MPs that he doesn’t regret the deal he agreed to in Brussels last month.

Addressing parliament after the all-night session heads (finally) to a climax, Tsipras is insisting that he didn’t have a mandate for Grexit:

Updated

Introduction: Eurozone GDP and Greek bailout deal

Good morning.

Greece’s bailout deal is heading down to the wire today, with Eurozone finance ministers due to sign off the plan today.

But first, Greece needs to give its approve.

And as I type, the country’s MPs are still arguing over whether to back the plan, as the debate which began on Thursday evening drags into Friday morning.

The fragile consensus between the major Greek parties appears to have unravelled overnight, with bitter exchanges between key players.

Alexis Tsipras is on his feet now, telling MPs that the bailout agreement is a “necessary choice”, so the vote may finally come soon.

Eurozone finance ministers are due to meet this afternoon in Brussels, to give their approval for the plan. They can also ponder the latest warning that Greece needs significant debt relief, with borrowing likely to peak at 201% of national output (GDP) in 2016.

Also on the agenda today, we get growth figures from across the eurozone for the second quarter of 2015.

France’s data is coming out now, followed by Germany at 7am BST, The Netherlands at 8.30am, Italy at 9am, and the overall eurozone at 10am BST.

I’ll be tracking all the action through the day.

Updated

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