April 12 2013

Finance ministers meet in Dublin to discuss crisis in Cyprus and Slovenia situation, with extensions to bailouts for Ireland and Portugal reportedly on the agenda. US retail sales register their largest drop in nine months, consumer sentiment falls…


Powered by Guardian.co.ukThis article titled “Eurozone crisis live: Cyprus tops agenda as finance ministers meet” was written by Dan Milmo and Simon Neville, for theguardian.com on Friday 12th April 2013 16.42 UTC

5.42pm BST

Cameron and Merkel settle in for a night of talks

David Cameron has arrived in Berlin and is meeting with his German counterpart, Angela Merkel.

Shortly after arriving, Merkel showed Cameron around the grounds of her country mansion posing for pictures and doing lots of statesman-like pointing into the distance.

They then headed inside for a fireside chat to sort out all of Europe's problems.

And with two of Europe's most powerful leaders settling in for the night, it marks a good point to end today's live coverage of the eurozone crisis.

Thank you for all your comments and enjoy the weekend, we'll be back on Monday.

German Chancellor Angela Merkel and her husband Joachim Sauer welcome David and Samantha Cameron.
German Chancellor Angela Merkel and her husband Joachim Sauer welcome David and Samantha Cameron. Photograph: FABRIZIO BENSCH/REUTERS

5.32pm BST

Family portrait

European finance ministers poses during their meeting in Dublin.
European finance ministers poses during their meeting in Dublin. Photograph: CATHAL MCNAUGHTON/REUTERS

As promised, here's the family portrait of the EU ministers at their meeting in Dublin.

5.11pm BST

Merkel and Cameron meet

David Cameron has arrived at Angela Merkel's country retreat and both are posing for photos with their spouses.

Meanwhile, to get you in the mood, the Open Europe blog has written a list of 10 things Cameron shouldn't say to Merkel.

These include:

"I always thought the ECB should become more activist."


"Can you point me to that no-bailout clause in the EU treaties again?"

Elsewhere, the often amusing Angela Merkel twitter feed has tweeted about David Cameron bringing his family to stay in Germany overnight. (see 12.33pm)

Updated at 5.17pm BST

5.02pm BST

New Portugal spending cuts agreed

Over in Lisbon, the Portuguese government has presented new spending cut plans to the EU after a court rejected its initial €1.3bn austerity measures for this year.

The cuts are required as part of the agreement for its €78bn bailout.

The government will implement new spending cuts worth €600m at all ministries and bring forward the same amount of reductions envisaged for 2014.

In return, eurozone finance ministers will extend Portugal's loan maturity date by seven years.

4.26pm BST

The eurozone finance ministers have finally made it out for their group photo. Will upload a picture shortly. The photographer just shouted "and one more but look happier!"

4.19pm BST

Just to add some context, the last time gold fell below ,500 an ounce was in July 2011

4.14pm BST

Updated at 4.14pm BST

4.10pm BST

Gold below ,500

Gold prices are plunging today despite poor US retail figures today and declining consumer confidence, which usually leads to a boost for gold as a save haven.

It is now down 3% today to ,497 an ounce. Silver is also suffering.

It won't be much help for Cyprus, who are considering selling its gold reserves to raise funds for its bailout agreement.

3.46pm BST

Busy FinMins

The eurozone finance minster meetings is Dublin continue, and they must've got really stuck into their discussions because they are now running late for their family photo which was due 15 minutes ago. Latest estimates are that they will be ready in 10 minutes, unless negotiations over where in the lineup each minister stands have reached an impasse.

One topic that hasn't been covered in discussions today has been the concern over Slovenia (see below).

3.29pm BST

Slovenia banking boss supports €1bn estimate for recapitalisation

Staying in Slovenia, the head of the country's largest bank said the government's estimate that around €1bn is needed to recapitalise the country's three main lenders is correct, despite the OECD questioning it earlier this week.

Janko Medja, head of Nova Ljubljanska Banka, said plans to sell a bank, as suggested by the Slovenia PM, won't happen for at least a year.

On Tuesday the OECD had said it believed the government may have underestimated the amount needed for recapitalising the banks.

2.57pm BST

Slovenia PM: asset sales plans due in 14 days

In Slovenia, seen as the next eurozone country to fall into trouble, privatisation plans will be put to the country's parliament in two weeks, according to the PM.

The plan to sell off state assets, including a bank, is aimed at avoiding a bailout.

PM Alenka Bratusek said she would send a stability programme to EU partners by May 9.

The country needs to raise €3bn to cover its budget deficit, recapitalise its state-owned banks and repay maturing debt.

Bratusek said

We will immediately start processes to privatise one or two companies. My wish is that one of those would be a bank

Slovenian Prime Minister Alenka Bratusek assured Brussels reforms will continue in the hope of avoiding a bailout.
Slovenian Prime Minister Alenka Bratusek assured Brussels reforms will continue in the hope of avoiding a bailout. Photograph: Xinhua/Landov/Barcroft Media

2.48pm BST

Herman speaks

President of the European Council tweets

1.39pm BST

German gold smuggler

It has just been pointed out by AP that the German man arrested trying to board a plane in Athens with gold in his luggage didn't have half a ton, but just 7kg.

A decimal point went astray in the original story. Police found 7.185kg, not 7,185kg.

It's not just the weight of the gold that has changed, it's value also fell 3% this week, below ,530, to its lowest point in almost a year.

1.32pm BST

Cyprus gold

Dijsselbloem says there will be on pressure put on Cyprus to sell its gold to fund the bailout.

He said

Selling some gold has always been a option put forward by the Cypriot authorities, but this is a decision to be made independently and it is not any demand from the Troika or Eurogroup.

And with that, the press conference has now ended.

1.28pm BST

Draghi confirms that he has told the Cyprus president that he cannot sack the country's bank governor, Panicos Demetriades.

He said the independence of the ECB is enshrined in EU law and will not interfere in the running of the bank.

1.23pm BST

Cyprus loan

Olli Rehn, the Finnish finance minister, says the €17bn Cyprus bailout was for net financing needs, while the new figure of €23bn is for gross financing.

The €23bn figure came from a leaked document which an exasperated Rehn said shouldn't be relied on.

It's like comparing apples with pears and ending up with oranges.

That's what happens when you write stories based on leaked documents.

Also asked how Cyprus will return to growth in just two years, he said

There is a lot of uncertainty for the exact growth of Cyprus

Interesting that the predictions are already being questioned when the loan hasn't even arrived yet.

1.11pm BST

1.10pm BST

Eurogroup statement on Cyprus

The eurozone finance ministers have issued a joint statement on Cyprus.

Here's a slice to whet your palate:

The Eurogroup notes with satisfaction that the Cypriot authorities have implemented decisive bank
resolution, restructuring and recapitalisation measures to address the fragile and unique situation of
Cyprus' financial sector. The Eurogroup commends the authorities for their demonstrated resolve in
implementing these important measures in a tight timeframe and reiterates its appreciation for the
efforts made by the Cypriot citizens over the last weeks.

Updated at 1.42pm BST

1.05pm BST

The ECB head Mario Draghi is at the Dublin press conference but has decided he has "nothing to add" to proceedings.

1.03pm BST

Cyprus loan increase "not discussed"

Austrian finance minister Maria Fekter says talk of increasing the €10bn Cyprus loan was not discussed in meetings this morning.

12.58pm BST

He also urges the Troika group of lenders and Greece to accelerate talks.

12.57pm BST

Dijsselbloem says Ireland is a living, breathing example that the adjustment programme works.

He adds that ministers would like to extend loans to Ireland and Portugal by another seven years.

12.54pm BST

Cyprus update

12.52pm BST

Dublin press conference begins

Jeroen Dijsselbloem, the Dutch finance minister, is now taking at the eurozone meeting in Dublin.

The conference can be watched here

He is currently running through the discussions that have been held, in particular the loan to Cyprus, which could be approved by April 24.

12.41pm BST

German man arrested over gold smuggling

An unusual tale from Greece, where a German national has been arrested for trying to board a plane at Athens International Airport with half a ton of gold in his luggage.

Officials also found nearly €300,000 in cash, according to Greek website ekathimerini.com

As Mike van Dulken points out

12.33pm BST

Cameron heads to Germany

David Cameron is on his way to Germany to meet up with Angela Merkel, and this time he's bringing the family.

Samantha Cameron and their three children will be coming with him, making it the first official trip they've been on with the prime minister.

Since the weekend is approaching, they've been invited to stay with Merkel and her publicity shy husband Joachim Sauer, at her Meseberg residence – the equivalent of Chequers.

Official conversation will focus on the Syrian conflict, European reform and the forthcoming G8 summit.

Updated at 12.49pm BST

11.35am BST

Germany: Cyprus loan non-negotiable

Confirming the line of Luxembourg's finance minister earlier, the German government has said the €10bn IMF loan is non-negotiable.

Eurozone finance ministers in Dublin gave political backing for the loan, but German government spokesmen said the amount was "not up for negotiation"

The international credit programme of about €10bn is of course very high in relation to the size of the Cypriot economy.

Updated at 12.23pm BST

10.32am BST

Cyprus bailout

Adding to Cyprus's woes on learning the bailout needed has increased to €23bn, Luxembourg's finance minister, Luc Frieden, told German radio this morning that the IMF's €10bn contribution cannot be increased.

He said

I believe the policy will be that the volume will remain at €10bn.

I know that right now [financing needs] are somewhat higher for the period from 2013-2016, but we cannot do any more.

Updated at 10.57am BST

10.22am BST

Irish bank debt maturities extended

Back in Dublin, our correspondent Henry McDonald writes

Ireland's finance minister has said he has secured a deal to extend Ireland's bank debt maturities by seven years.

Michael Noonan said he reached the agreement with the Republic's EU partners as he arrived in Dublin Castle this morning for the EU finance ministers' summit.

Eurogroup ministers are meeting first to discuss the proposed deal for Ireland and Portugal which would give both countries more time to repay the EU portion of the two countries' bailouts.

Speaking on his arrival at the meeting, Noonan said he was reasonably optimistic.

He said: "The discussions I have had over the last 48 hours were quite successful and there is certainly agreement in principle now.

"Whether there is any particular difficulty that arises from colleagues or not, we won’t know until it is openly discussed at meetings, but I am reasonably optimistic."

Irish finance minister Michael Noonan (right) and Greek finance minister Ioannis Stournaras at the Dublin meetings.
Irish finance minister Michael Noonan (right) and Greek finance minister Ioannis Stournaras at the Dublin meetings. Photograph: Aidan Crawley/EPA

Updated at 10.58am BST

10.03am BST

Eurozone industrial output

Eurozone industrial output fell more than expected in February.

It dropped 3.1% compared with a year earlier and was up just 0.4% compared with January.

Bad news was compounded by a revision of January figures from -0.4% month-on-month to -0.6%

10.00am BST

Cyprus by numbers

As we look forward to the eurozone finance ministers' meeting in Dublin, where it's hoped the refinancing of Cyprus can be agreed, here's a quick reminder of what money the country needs.

According to Reuters, Cyprus needs €23bn from the second quarter of 2013 to the first quarter of 2016.

The eurozone bailout fund will give €9bn, the IMF €1bn and Cyprus must find €13bn.

The €10bn international bailout will go on:

  • €2.5bn on recapitalising the remains of the banking sector
  • €4.1bn on redeeming maturing government debt
  • €3.4bn to cover fiscal needs of Cypriot government

And Cyprus will make up its contribution from:

  • Up to €10.6bn from resolution on Laiki bank, losses imposed on junior shareholders and deposit for equity swap of uninsured depositors at Bank of Cyprus
  • Up to €600m from corporate tax rise to 12.5% from 10% and doubling capital gains tax to 30%
  • Around €400m from gold sales
  • Up to €1bn from debt rollover
  • €1.4bn from privatisation
  • €100m from a reduction in interest rates on its Russian loans

A full breakdown of the numbers can be found here

Updated at 12.06pm BST

9.37am BST

UK construction data

UK construction output rose in February by 5.5% compared with January, but fell 7% year-on-year, according to the ONS.

The previous year-on-year numbers in January was -7.9%.

Updated at 9.37am BST

9.11am BST

IMF forecasts leaked

Bloomberg is running an article that, it claims, contains a draft of the International Monetary Fund's world economic outlook due to be released next week. It contains a lowered forecast for US economic growth, Bloomberg says, will GDP expanding by 1.7% instead of 2% due to the automatic budget cuts and tax changes that have kicked in this year. The global economy has been inched lower as well, from 3.5% to 3.4%.

Updated at 9.11am BST

8.53am BST

Osborne: Dublin meeting will be "low key"

The Press Association is quoting a Treasury source, saying that George Osborne will attend the gathering of EU finance ministers but it will be "rather low key from a UK perspective."This means that the UK won't be extending any bilateral loans to Cyprus and will not be closely involved in discussions about a banking union and the eurozone-wide banking supervisor. UK banks are not expected to be subjected to the authority. The treasury minister, Greg Clark, will also be attending.

8.42am BST

This WSJ comment piece about Cyprus is being tweeted this morning. The intro is pointed.

8.39am BST

Market update

The FTSE got off to a negative start this morning, down 20.31 points or 0.3% at 6395. Reuters attributes this to profit taking – the FTSE has been on a good run – and concerns that Cyprus and others will require deeper bailouts.

Meanwhile, the pan-European FTSEurofirst 300 index has also slipped 0.3% in early trading.

Richard Perry, chief strategist at Central Markets, said:

There is the potential that Cyprus may need more money, and that may be a reason for investors to book a bit of profit on the back of the recent strong run.

Updated at 8.40am BST

8.29am BST

Dijsselbloem speaks

Mind out markets, Jeroen Dijsselbloem, the Dutch finance minister and head of the Eurogroup, has given an interview. But it looks slightly more benign than his index-rattling efforts last month, when he said the Cyprus deposit-raid might be a blueprint for all future EU bailouts.

In his interview with the Irish Times he says the outlook for Ireland – one of five EU countries to receive a bailout (if you count Spain's banks) – is "rather positive". He dances around the notorious "template" comments about Cyprus, stressing that "we have to work towards a different way of working with banking crises in the future." But he uses a phrase – bail-in – that is a euphemism for tapping savers' deposits above €100,000 (and bondholders too). So the issue of deposit raids – Cypriots are facing a bigger wipeout than first thought after events of recent days – won't go away. He says:

In a post-crisis situation you need mechanisms to deal with these problems. We are working on those – in the resolution and recovery directive there will be a way of dealing with a ‘bail-in’, giving us the instruments to do bailins in a proper way.

He goes on to say that deposits above €100,000 are still fair game.

There will be a hierarchy and the uninsured depositors will be at the end of the hierarchy… I can’t speculate on what the outcome is, but they’re definitely included in the proposal that’s now on the table [to deal with future crises].

Updated at 12.50pm BST

8.17am BST

Henry McDonald, our Ireland correspondent, says today's meeting of Eurogroup finance ministers and heads of central banks in Dublin will be picketed by members of the Republic's largest police union.

Up to 30 members of the Garda Representative Association's central executive have gathered outside Dublin Castle where the Eurogroup event for finance ministers is taking place. 

The GRA say they have staged the picket in protest at what they call the "unfairness" of cuts imposed on rank and file police officers in the state. 

GRA general secretary PJ Stone said this morning: "We have been badly treated by our political masters, and having been repeatedly denied the opportunity to directly negotiate our pay, we must express our anger and frustration through our continued placard protest."

Their placards include: "IRELAND Support your Police" and "IRLAND Unterstutze Deine Polizei".

The sight of the union representing more than 11,000 Gardai picketing their own government organised pan-European event will be an embarrassment for the Fine Gael-Labour coalition. Ireland holds the EU Presidency up until midway through this year. 

The stability of the European financial system and the growth prospects for the Union are a key topic for today.

Tomorrow, ministers will look at more information sharing between tax authorities.

The sharing of information is to combat tax evasion is also on the agenda at Dublin Castle.

Updated at 8.23am BST

8.17am BST

Spotlight on Dublin and Berlin

Morning all – it is a day of gatherings for the eurozone. Given that it is the year of the gathering in Ireland (to celebrate the country's considerable cultural and genealogical wattage), there is appropriately enough a meeting of Eurogroup finance ministers in Dublin. They will discuss the ongoing crisis in Cyprus and then move on to the imminent one in Slovenia before, reportedly, agreeing to extend the bailouts for Ireland and Portugal. But the latter might not be announced until tomorrow.

In Berlin, David Cameron is meeting Angela Merkel. The election clock is ticking for both of them, with Merkel's coming later this year. Right now, one of them is more likely to be returned to power than the other – but Cameron still has two years to ensure that the eurozone does not continue to destabilise the UK economy and his election chances.

Updated at 8.22am BST

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