+44 (0)20 7170 8200
Given how surprisingly robust recent UK economic data has been in the past few weeks, markets had been expecting a broadly unanimous vote (9-0) for the addition of a further £50bn of QE at the last meeting of the Monetary Policy Committee.
Yesterday’s slide in the pound was a little puzzling given the better than expected public finance figures for January which showed that the UK government collected more tax revenue than it spent, to the tune of £10.7bn, making it highly likely that the Chancellor will undershoot his borrowing target for 2011 of £127bn.
After hours of tortuous negotiations Greece was finally granted its second bailout in the early hours of this morning and thus now be able to meet the €14.5bn bond payment in March, and thus avert a messy default.
The key event today remains the meeting of EU finance ministers which over the weekend reports have suggested could well see the ratification of the latest Greek bailout.
EU finance ministers are expected to consider a bailout deal of €130bn for Greece on Monday, while the window for the PSI bond swap would be between 22nd February and the 9th March.
Yesterdays back and forth between Greek politicians and EU policymakers had all the hallmarks of an unedifying playground spat, with accusations and insults flying thick and fast.
Yesterday’s late cancellation of today’s EU finance ministers meeting appears symptomatic of the brinkmanship being played out between EU officials and Greek politicians as they play cat and mouse with each other, and the markets over the ratification of the latest Greek bailout.
Ratings agency Moody’s blindsided the markets late last night, with a raft of unexpected adjustments to the ratings of nine European countries, downgrading with a negative outlook, Spain, Italy and Portugal as well as three others, while putting France, Austria and the UK’s triple “A” ratings on a negative outlook.
Yesterday’s austerity vote was passed as expected by Greek lawmakers; however at this stage the passing of the vote by the parliament is now pretty much beside the point.
Michael talks to Canada's BNN about a potential Greek default and possible fall-out.