30th June 2011
The Greek parliament approved a £25billion programme of tax rises and spending cuts yesterday that will allow a new £10.7billion European Union-IMF bail-out to save the country from defaulting.
However, the country remains braced for fresh riots today, reports the Daily Telegraph. The austerity bill, which was passed by 155 votes to 138, was greeted with strikes and violent protests outside parliament yesterday.
Over the next two weeks EU treasuries must come up with a second Greek bailout which could be as high as £107billion on top of the £98billion in rescue loans agreed for Greece in May 2010. If the EU falters, then the IMF will not give the green light for another bail-out instalment in September, prompting a new crisis.
However, anxiety remains that Greece could yet plunge the euro into crisis by going bankrupt on July 15 and defaulting on debt repayments.
Once the immediate panic passes, European leaders will have a laundry list of tasks that must be completed, adds the Financial Times (paywall).
The role of private bondholders remains a difficult issue, says the Financial Times (paywall). About €85bn in Greek bonds come due in the three years of the new bail-out, and eurozone countries want a significant portion of the rescue to be borne by those investors.
Global markets rally after vote
Markets surged on news that Greece passed the austerity measures. The FTSE gained 0.56% or 32 points at 8.30am, pushing the index up to 5,888, reports Investment Week.
On Wall Street, the Dow Jones had its best three-day run in three months, up 0.6% or 72 points to 12,261, buoyed by the news from Greece, while overnight in Asia the Nikkei advanced 0.19% or 18 points to 9,816.
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