The Greek government must tell the European Union later today whether it accepts the terms of the €130bn rescue package, as talks with its creditors falter.
As time ticks on there is increasing concern that a lack of agreement among Greek politicians will overshadow the day. The Asian markets were up overnight on the back of Friday’s strong jobs figures from the US. (Japan’s Nikkei average rose 1.1% to a three-month high of 8,925 points, the Hang Seng was up 0.51% at 20,862.) Back in Europen the mood is more somber.
Greek coalition parties are supposed to be working to a deadline of midday – 10am GMT. That might get pushed back, of course, but if it passes without agreement it will do nothing to calm the mood.
Here is the view from analysts at Investec:
Greek politicians face a general election soon after the second bailout has been agreed (or not as it may be). The prospect of an election campaign is certain to influence bailout negotiations. The extra austerity measures may well be counterproductive, but a messy default and uncertainty over Greece’s position in the Euro will not do much good either, so it is a bit of a lose-lose situation for Greek politicians. Public opinion seems to put greater trust in outsiders than in domestic politicians though, so putting up with EU/IMF conditions may still have the upper hand with the electorate, but remains to be seen if politicians can agree. With no agreement later today, expect markets to become increasingly concerned and a lack of
flexibility from the EU may cause some contagion…