SHARE
COPY LINK

EUROPE

Greece talks have ‘lost ground’: Merkel

Chancellor Angela Merkel warned on Thursday that talks between Greece and its creditors were losing ground as a final deadline for avoiding the country's bankruptcy approaches.

Greece talks have 'lost ground': Merkel
Angela Merkel in Brussels on Thursday. Photo: DPA

“We haven't made the necessary progress” on Greece during the finance ministers' meeting earlier in the day and “in some places we've actually fallen back,” Merkel told reporters as she arrived in Brussels.

“It's very important that Greece continue to work with the three institutions and that the finance ministers decide. The European Council [of heads of government] won't get involved in the negotiations.”

Merkel and other EU leaders are meeting on Thursday for a summit slated to address refugee policy, the future of the trading and currency union and the demands of the UK for reform.

Greece's troubles are not on the agenda, but are certain to come up in the discussions.

Turning to address the refugee crisis in Europe, Merkel said that “we must remember the extraordinary summit we held” days after hundreds drowned off the Libyan coast in April.

“We've made progress in our collective efforts too, but now it's about finding sustainable, long-term solutions, that means more solidarity among the [EU] member states, that means decisive fighting of the causes,” the Chancellor said.

“There are serious tensions emerging between the different countries – we can't afford that in Europe,” she added.

Schäuble warns deal slipping away

Finance Minister Wolfgang Schäuble warned earlier on Thursday that the Greek government and its European creditors were moving apart as he arrived for yet another round of talks in Brussels.

“There is rather a larger difference than a rapprochement,” Schäuble told reporters as he arrived at a finance ministers' meeting held in advance of the leaders' summit.

Greece's creditors, the European Commission, International Monetary Fund (IMF) and European Central Bank (ECB), have not accepted a fresh batch of Greek proposals for cutting government spending and reforming the country's economy, instead offering their own set of suggestions.

Now the finance ministers must decide which document will form the basis for the leaders' discussions later, Brussels diplomats said.

If Greece does not receive a final tranche of €7.2 billion in emergency loans, the government will be unable to repay a loan installment to the IMF at the end of June and will be officially bankrupt.

There is a chance that leaders of eurozone member countries may be called out of the summit for a separate meeting about Greece's future in the single currency.

Greece's left-wing Syriza government has “not moved, or rather moved backwards, and therefore I'm not very optimistic for our session today,” Schäuble said.

A previous meeting of the finance ministers on Wednesday produced no result.

Prime Minister David Cameron has promised the British public a vote on whether the UK should remain a part of the EU and has been touring Europe hoping to win allies – including during this week's royal visit to Germany by Queen Elizabeth II.

But a note of optimism was struck by European Parliament president Martin Schulz.

“I have complete confidence that we can bring about an agreement,” the Social Democratic Party (SPD) politician said.

 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

SHOW COMMENTS