Graeme Wearden (until 4) and Nick Fletcher 

George Osborne warns Greek debt standoff is threatening global economy – live updates

Rolling coverage as Yanis Varoufakis visits London to argue for Greece’s debts to be renegotiated
  
  

Greece’s new finance minister Yanis Varoufakis meeting George Osborne at 11 Downing Street today.
Greece’s new finance minister Yanis Varoufakis meeting George Osborne at 11 Downing Street today. Photograph: MATT DUNHAM / POOL/EPA

Closing summary

Time for a quick recap:

George Osborne has said the standoff between Greece and the eurozone is the biggest threat to the global economy, following his meeting at Number 11 with new Greek finance minister Yanis Varoufakis.

Meanwhile in an interview with Channel 4, Varoufakis said he expects a deal shortly to “put the Greek crisis away once and for all.”

To remind everyone of the weakness of the Greek economy, the country’s factory sector shrank at its fastest rate in 15 months in January, according to Markit.

But the Athens stock market ended 4.64% higher at 755.42, helped by some supportive comments from President Obama, who said:

You cannot keep on squeezing countries that are in the midst of depression.

At some point, there has to be a growth strategy in order to pay off their debts and eliminate some of their deficits.”

And on that note it’s time to close up for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Meanwhile European Central Bank governing council member and Bank of France Christian Noyer has also been talking about Greece:

Here’s the full quote from the Channel 4 Varoufakis interview about an imminent deal:

There will be a deal within a very short space of time that is going to make it perfectly clear to everyone that Greece can play within the rules and in a way that puts the Greek crisis away, once and for all.

And here’s a clip of the Channel 4 interview:

Varoufakis expects deal shortly to solve Greek crisis

More from the Channel 4 interview with Vanis Varoufakis, courtesy of Reuters snaps:

  • 02-Feb-2015 17:22 - GREEK FINANCE MINISTER - NEED SENSE OF STABILITY TO REVERSE FLOW OF MONEY OUT OF GREEK BANKS - UK’S CHANNEL 4 NEWS
  • 02-Feb-2015 17:22 - GREEK FINANCE MINISTER - SENSE OF STABILITY WILL BE CREATED BY EUROPEAN PARTNERS FINDING SOLUTION QUICKLY
  • 02-Feb-2015 17:23 - GREEK FINANCE MINISTER - EUROPEANS SHOULD NOT TOY WITH STABILITY OF EURO ZONE, MUST SETTLE NERVES
  • 02-Feb-2015 17:23 - GREEK FINANCE MINISTER - THERE WILL BE A DEAL WITHIN A VERY SHORT SPACE OF TIME THAT PUTS GREEK CRISIS AWAY ONCE AND FOR ALL
  • 02-Feb-2015 17:23 - GREEK FINANCE MINISTER - WOULD TAKE A VERY CYNICAL DISPOSITION TO BELIEVE ECB WOULD DO ANYTHING TO UNDERMINE GREECE, MONETARY UNION
  • 02-Feb-2015 17:24 - GREEK FINANCE MINISTER - GREEK BOND YIELDS REFLECT MARKET UNCERTAINTY DURING TRANSITION PERIOD
  • 02-Feb-2015 17:26 - GREEK FINANCE MINISTER - WE ARE NOT FACING A WILD WEST SHOWDOWN, TRYING TO FIND SOLUTION THAT BENEFITS AVERAGE EUROPEAN
  • 02-Feb-2015 17:26 - GREEK FINANCE MINISTER - URGENCY IS OF THE ESSENCE IN SOLVING GREEK DEBT PROBLEM
  • 02-Feb-2015 17:27 - GREEK FINANCE MINISTER - WHOLE OF EUROPE WILL “BIND TOGETHER” IN NEXT FEW HOURS AND DAYS TO DO ITS JOB

Updated

German finance minister Wolfgang Schaeuble is getting antsy about the new Greek government’s attitude to Russia.

He told a Reuters summit that Berlin did not like Greece’s new closeness to Russia and said aid from Moscow was not a viable alternative to European assistance. Asked how much the new closeness between Greece and Russia was a concern, he said:

We don’t like that. I don’t believe Russia can replace European solidarity.

But he added:

It’s in our interest to co-operate closely and reasonably with Russia and for Russia to contribute to a stable global economic development.

More from George Osborne after his meeting with Varoufakis:

And an endorsement:

More from the Channel 4 interview:

Yanis Varoufakis has told Channel 4 he expects some kind of deal shortly:

Video: George Osborne meets Greece's finance minister

The chancellor speaks after meeting Greece’s new finance minister Yanis Varoufakis at Downing Street on Monday

If you’re just joining us, here’s our news story on today’s talks at Number 11 Downing Street, by Katie Allen:

Greece debt standoff: George Osborne urges Athens and Brussels to strike deal

George Osborne has warned that the standoff between Greece and the eurozone poses “the greatest risk to the global economy” after meeting the new Greek finance minister.

The chancellor hosted a meeting at 11 Downing Street with his Greek counterpart, Yanis Varoufakis, who is on a whistlestop tour of Europe to win support for a renegotiated debt deal.

After the meeting, Osborne warned that the confrontation could affect the stability of the eurozone, the UK’s biggest trading partner.

“We had a constructive discussion, and it is clear that the standoff between Greece and the eurozone is the greatest risk to the global economy,” Osborne said. “I urge the Greek finance minister to act responsibly but it’s also important that the eurozone has a better plan for jobs and growth.

“It is a rising threat to the British economy. And we have got to make sure that inEurope, as in Britain, we choose competence over chaos.”....

(click here for the full story)


Back in the markets, Greek government bonds have continued to weaken today.

That has pushed up the yield on its debt, suggesting that traders see a higher chance of default or restructuring.

Yanis Varoufakis was channelling the spirit of Happy Mondays/Black Grape star Shaun Ryder as he walked across Downing Street today.

So argues Imogen Fox, our head of fashion:

It was apparent from the photocall on Downing Street that we were witnessing a bit of a fashion moment. There was Osborne, himself riding high on his rebooted fashion skills with his Julius-Caesar haircut and properly fitting suit, shaking hands with a man wearing a Wetherspoon’s-appropriate bright-blue shirt and an early-1990s madchester drug dealer’s coat.

The shaved head, the feet apart hands-in-pockets bouncer’s stance and the easy grin serving to underline the look....

Those were the days

More here: Greek finance minister Yanis Varoufakis goes casual at number 11

Updated

Is George Osborne correct that the Greek debt standoff is the biggest risk to the global economy?

Well, the market reaction since Greece’s general election eight days ago is quite muted. Greek bonds have weakened, and its bank shares have slumped (before recovering some value) but there’s been relatively little reaction elsewhere.

Rob Wood of Berenberg bank says Greece’s eurozone future is a worry, but not yet a panic:

Of course a potential Grexit accident represents a tail risk that markets may be fearful of......

In any case, market moves since Syriza grabbed power in Greece show that the Eurozone’s contagion controls are stronger now than back in 2012.

And Mujtaba Rahman of Eurasia Group reckons that the two sides will strike a deal:

German Chancellor Angela Merkel will not want to be the Chancellor that presides over the first reversal in 50+ years of European integration. Greek Prime minister Alexis Tsipras does not want to pull Greece out of Europe.

There is no way a country can leave the Euro and remain a member of the Union. Historical factors also play a role. Greece’s European orientation predates the linking of the country’s course with the Euro and it is unlikely this link will be broken so easily.

And if Tsipras fails and calls new elections, Rahman reckons there’s more chance of a new pro-bailout programme government being formed, rather than Greece leaving the eurozone.

Updated

Lunchtime summary: Osborne sounds alarm over eurozone growth

UK chancellor George Osborne has warned that the Greek debt row is “fast becoming the biggest threat to the global economy.”

He was speaking after meeting Greece’s new finance minister at Downing Street, on the latest phase of Yanis Varoufakis’s tour of European capitals.

During the talks, Osborne urged Varoufakis not to be rash, but also acknowledged that Europe must do more, saying:

I urge the Greek finance minister to act responsibly but it’s also important that the eurozone has a better plan for jobs and growth. It is a rising threat to the British economy. And we have got to make sure that in Europe as in Britain, we choose competence over chaos.

Osborne’s comments come hours after Barack Obama called for compromise.

The president made an important contribution to the debate, telling CNN that:

You cannot keep on squeezing countries that are in the midst of depression.

At some point, there has to be a growth strategy in order to pay off their debts and eliminate some of their deficits.

Obama’s comments have helped the Athens stock market surge by around 4.5% today, led by banking shares.

Varoufakis, the former economics professor, is due to meet City investors and banks this afternoon. Sources say he will promise to keep repaying Greek debt which they hold.

Varoufakis maintained the new Greek government’s policy of doing things differently – marching up Downing Street in a wide-collared, thigh-length wax/leather(I’m no fashion correspondent) coat and no tie.

Social media was entranced, and divided:

There are also signs that the Greek political crisis is hurting its economy. Data this morning showed that its factory sector shrank at the fastest rate in 15 months in January.

The wider Eurozone’s manufacturing sector only managed meagre growth, although Spain beat forecasts.

Updated

Osborne warns of 'rising threat' to British economy

Reuters now have the full quotes from George Osborne, on today’s ‘constructive’ meeting with his Greek counterpart.

And it’s clear that Osborne is urging the eurozone to pick up its game:

“We had a constructive discussion, and it is clear that the stand-off between Greece and the euro zone is the greatest risk to the global economy,”

“I urge the Greek finance minister to act responsibly but it’s also important that the euro zone has a better plan for jobs and growth,” .

“It is a rising threat to the British economy. And we have got to make sure that in Europe as in Britain, we choose competence over chaos.”

George Osborne has also warned that the stand-off between the eurozone and Greece is fast becoming the biggest risk to the global economy, Reuters reports.

Updated

Hat-tip to Sky’s Emily Purser, who’s been stationed on a rather chilly Downing Street taking video and photos of the meeting:

Newsflash from Downing Street; George Osborne apparently told Varoufakis that all sides must act “responsibly” over the issue of Greece’s debts.

  • BRITISH FINANCE MINISTER OSBORNE SAYS TOLD GREEK FINANCE MINISTER ALL SIDES NEED TO ACT RESPONSIBLY - REUTERS

The two finance ministers spoke over coffee.

Updated

Greek finance minister Yanis Varoufakis will tell major investors and bankers in the City today that Greece will be able to service its debt with no detrimental impact on private investors, Reuters reports:

The source said Varoufakis planned to meet about 100 banks and financial institutions at an event later on Monday.

“We will be able to service the Greek debt on terms that will have no detrimental impact on, especially private, bond holders,” said the source who spoke on condition of anonymity due to the sensitivity of the matter.

A group from the Left Unity party gave the Greek delegation a friendly reception at the gates of Downing Street -- as flagged up earlier, they are calling for the ‘burden of austerity’ must be lifted off Greece.

Video: Varoufakis makes no comment after meeting Osborne

The meeting at Number 11 Downing Street has just finished after around 50 minutes.

Disappointingly, Yanis Varoufakis only gave a quick wave to the assembled media outside, before jumping into a waiting limo:

Next stop, meeting City institutions.

Updated

Yanis Varoufakis is due in the City after his meeting with George Osborne.

Reuters just snapped up that he’ll meet around 100 institutions, and reassure them that Athens doesn’t plan to default on their loans.

  • GREEK FINANCE MINISTER TO MEET AROUND 100 BANKS AND FINANCIAL INSTITUTIONS LATER ON MONDAY - SOURCE
  • GREEK FINANCE MINISTER TO SAY GREECE WILL BE ABLE TO SERVICE DEBT, NO DETRIMENTAL IMPACT FOR PRIVATE INVESTORS - SOURCE

The Jubilee Debt Campaign hopes that George Osborne will support their call for debt relief for Greece:

The director, Sarah-Jayne Clifton, argues:

“Greece’s debt comes from loans to bail out banks and vulture funds across Europe, including in Britain. In 2012 the UK government refused to stop vulture funds that were using UK law to pillage Greece’s finances. George Osborne should now show leadership and support the cancellation of Greece’s debts that is urgently needed.”

“The costs of any cancellation should be borne by recovering money from the irresponsible lenders who really benefitted from the bailout, the banks and financial speculators.”

I suspect this will not be on Osborne’s agenda...

This could be a testy meeting, suggests Ed Conway of Sky News. After all, prime minister David Cameron’s first reaction to Syriza’s win was to tweet that it would increase economic uncertainty across Europe.

And here’s that handshake: (via Sky News)

Yanis Varoufakis does cut a certain dash in the fashion stakes....

Yanis Varoufakis arrives at Downing Street

Greece’s finance minister has arrived at Downing Street for talks with the UK government.

Yanis Varoufakis and George Osborne had a friendly handshake, posed briefly for the cameras, exchanged a few words, and then vanished inside Number 11 Downing Street.

Updated

Next stop Berlin?.....

Members of Britain’s “Left Unity” party were planning to take a banner to the gates of Downing Street this morning, reading “Greece, we support you” .

Left Unity, a “sister party” of Greece’s Syriza, is encouraged by its success in last Sunday’s election:

Andrew Burgin of Left Unity said:

“We’ve come to welcome Yanis Varoufakis to London – and to see him wipe that smile off George Osborne’s face. “The burden of austerity must be lifted from the Greek people. We stand with them: they are fighting for us all.

“After so many years of Osborne’s austerity Britain and across Europe, finally a government has taken power who will tell him ‘no more’.”

Yanis Varoufakis is due at 11 Downing Street in 30 minutes time....

Greece’s prime minister is speaking in Cyprus now.

Alexis Tsipras says that his government will use its mandate to push for “strong negotiations” with its European partners. He hopes to get a result that is beneficial for all Europeans.

He says the abolition of the Troika (as appears likely) would be an “important institutional step” for Europe.

He also touches on Russia, saying that Cyprus and Greece can be “a bridge of peace” between Europe and Moscow.[last week, Greece managed to delay new sanctions against Russia].

Tsipras also warns that Europe would be “dismembered on its Southern flank” if it lost Cyprus and Greece.

Here’s a handy summary of the state of play this morning, from AFP:

Greek Finance Minister Yanis Varoufakis meets his British counterpart on Monday as he seeks to build support for a renegotiation of his country’s 240-billion-euro ($270-billion) bailout in the face of German opposition.

The latest stop on his European charm offensive comes as US President Barack Obama warned the world that imposing tough austerity programmes on Greece could backfire on its creditors.

“You cannot keep on squeezing countries that are in the midst of depression,” Obama told CNN’s “Fareed Zakaria GPS”.

“At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits.”

Obama said the Greek economy was in “dire need” of reform but warned that drastic changes were tough to implement in a struggling economy.

“It’s very hard to initiate those changes if peoples’ standards of living are dropping by 25 percent. Over time, eventually, the political system - the society - can’t sustain it,” the US leader said.

Varoufakis meets in London with George Osborne at 1100 GMT after a stop Sunday in Paris where he said he wanted to reach a new debt deal within months to end his country’s loan “addiction”, which was loading ever more liabilities on its economy.

Greece therefore did not want a promised loan tranche of 7.2 billion euros from its trio of creditors, the International Monetary Fund, European Union and European Central Bank (ECB), he reiterated.

“It’s not that we don’t need the money; we’re desperate,” he said at a joint press conference with his French counterpart Michel Sapin.

“What this government is all about is ending this addiction.”

Although not in the eurozone, Britain is in the IMF and Varoufakis is looking for as many allies as possible for any future political negotiations within the EU.

Varoufakis is also expected to meet with key figures from London’s key financial sector, which is home to many lenders exposed to Greek debt.

Greece’s new anti-austerity government has refused to work with the so-called troika of international bailout inspectors charged with overseeing its painful fiscal reforms, instead seeking direct contacts with creditors and governments.

British minister Osborne welcomed Varoufakis’s visit, saying the pair would discuss “the stability of the European economy and how to boost its growth.”

No sign of the Greek finance minister in London yet.

But his boss, prime minister Alexis Tsipras, has now inspected a presidential honour guard in Cyprus, as his first official visit gets underway:

Greek factory PMI hits 15-month low

Oh dear, Greece’s factory sector shrank at its fastest rate in 15 months in January, data firm Markit just reported.

New orders from overseas and domestic customers both fell, showing that the economy was weakening during the run-up to the general election.

And input costs fell at the fastest rate for 69 months, as deflation continued to grip Greece.

This dragged the Greek factory PMI down to a 15-month low of 48.3 in January (where any reading below 50= contraction).

Phil Smith, Markit economist, sounds gloomy:

“January saw a further fall in new orders lead manufacturers to reduce their output for the first time in three months.

The heightened uncertainty brought about by elections was reportedly a factor behind the sector’s worsening performance, though new business from abroad also fell again and this was the fifth time in a row that the PMI has posted below 50, suggesting that the causes of the sector’s malaise are more deep-rooted.”

The overall eurozone factory sector only managed meagre growth, with a PMI of just 51.0.

Greek stock market boosted by President Obama's comments

This chart confirms that Greek bank stocks are surging again today, driving the main Athens market up over 5%.

Athens traders are crediting the rally to comments made by president Obama last night, when the US president appeared to argue for a break from austerity.

Omaba told CNN that:

“You cannot keep on squeezing countries that are in the midst of depression”

“At some point, there has to be a growth strategy in order to pay off their debts and eliminate some of their deficits.”

Obama also told CNN that all sides must compromise, to keep Greece in the eurozone. He said:

When the financial crisis in Greece flared up a few years ago, we were very active in trying to arrive at some sort of accommodation. I think there’s recognition on the part of Germany and others that it would be better for Greece to stay in the eurozone than be outside of it and the markets will obviously be skittish about this.”

Updated

More encouraging economic news, this time from Italy.

The slump in its factory sector almost ended last month, with its PMI index (based on interviews with purchasing managers) rising to a four-month high of 49.9 in January from 48.4.

The 50-point mark is the difference between expansion and contraction.

France’s downturn also eased - its factory PMI rose to 49.2 from a pretty dire 47.5 in December.

Just checked with the Treasury, and I’m afraid that Osborne and Varoufakis won’t be holding a press conference.

Hopefully we’ll hear details of their meeting afterwards....

The Greek stock market has surged by over 5% in early trading, and banking stocks are leading the way.

Updated

Osborne: We will discuss European growth

We’re expecting Yanis Varoufakis to arrive at Number 11 Downing Street late this morning, for talks with chancellor George Osborne.

Osborne has issued a statement this morning ahead of the talks, saying:

“I welcome this opportunity, so soon after the Greek election, to discuss face to face with Yanis Varoufakis the stability of the European economy and how to boost its growth.”

So no direct mention of the Greek bailout.

Unlike most eurozone governments, Britain isn’t directly exposed to Greece’s bailout through Europe’s share [Germany is owed the most, around €56.5bn].

But, the City does have a stake. UK banks are estimated to have lent around £9bn to Greek banks, customers and businesses, exposing them to losses if the Greek economy plunges into a new crisis.

Updated

Encouraging news from Spain just hit the wires - its factories grew at a faster rate in January.

The Spanish manufacturing PMI, which measures activity in the sector, rose to 54.7 last month from 53.8 in December.

Greece’s new prime minister, Alexis Tsipras, is making his first trip overseas today.

He’s just arrived in Cyprus; another country which was forced into seeking a bailout during the debt crisis:

Updated

Greece’s new government has apparently achieved one early goal, persuading Europe to abandon the dreaded Troika.

Germany’s Handelsblatt newspaper reports this morning that Commission president Jean-Claude Juncker has agreed to stop the regular, highly unpopular, visits by Greece’s lenders to assess its progress:

“We have to find an alternative quickly.”

Abolishing the Troika may make good headlines, but it doesn’t actually mean Greece owes any less..

That awkward press conference on Friday may have scuppered Jeroen Dijsselbloem’s chances of a second term leading Europe’s finance chiefs:

Some newsflashes from Paris; finance minister Michel Sapin is reiterating that European taxpayers cannot take on Greek liabilities, and urging structural reforms.

Sapin is also calling for Greece to meet with Angela Merkel’s government:

Updated

Varoufakis: Greece needs cold turkey

Varoufakis set the scene for today’s London visit in Paris yesterday, where he told reporters that Greece must end its “addiction” to bailout payments.

As we wrote last night:

Varoufakis – who offered to produce proposals for a reworked debt deal within a month – said Greece had no intention of asking for new loans and it was time to go “cold turkey”.

“For the last five years, Greece has been living for the next loan tranche. We have resembled drug addicts craving the next dose. What this government is all about is ending the addiction.”

The French finance minister, Michel Sapin, said France was ready to help Greece find a deal, but any agreement would need to include structural reforms.

Economists fear, though, that Greek banks will bleed deposits while the new government talks about a new debt deal:

Theodore Pelagides, a professor of economics at Piraeus University and research fellow at Brookings Institute, warned:

“Unless negotiations are completed in the next few days there is a real risk that banks will be unable to respond to the growing uncertainty … The government really doesn’t have the time it thinks it has to reach an agreement that would basically save the economy.”

Full story: Greek minister to meet George Osborne about proposed debt deal

Updated

Greek finance minister heads to London

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

Has any new finance minister made *quite* as rapid a start as Yanis Varoufakis?

Less than a week after being sworn in, Varoufakis is already holding a whistle-stop tour of European capitals to drum up support (he hopes!) for the new Greek government’s push to renegotiate its debts.

And this morning he descends on London, to meet George Osborne, the UK’s Chancellor of the Exchequer and investors in the City.

Varoufakis is determined to visit as many corridors of power as possible. Yesterday he met French finance minister Michel Sapin in Paris for talks.

He’s already spoken with European Central Bank chief Mario Draghi on Saturday night, and is expected to meet Italian PM Matteo Renzi, French president François Hollande and European commission president Jean-Claude Juncker this week.

And, of course, he’s already gone toe-to-toe with the head of the eurogroup of finance ministers, Jeroen Dijsselbloem in a tense home fixture. That ended as a gritty draw, followed by a rather unfriendly handshake.

Greece’s debt struggle is the main events dominating the markets today.

But we also get a flurry of economic data, showing how factories in Europe - and across the world - fared in January.

Economists predict that France and Italy continued to struggle, while Germany pulled ahead, highlighting the tensions at the heart of the eurozone.

We’ll be tracking all the main events through the day, as usual....

 

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