16.35 The European markets have now closed, and it’s official: Q3 2011
saw the biggest FTSE 100 drop since 2002. We’ll be bringing you an in-depth
story on that this evening, so stay tuned.
The FTSE 100 is down 1.97pc on the day, the CAC 40 has dropped
by 2.18pc, the DAX has lost 2.8pc and the FTSE MIB is off by
16.18 Greece may have just introduced an extremely unpopular property
tax, but that’s not the only source of income that the nation is seeking.
Last year smoking was banned in public places like cafes and bars, but today
the government said that night clubs larger than 300 square metres could set
aside half of their space for smokers – as long as they pay a tax of €200,
per square metre, per year.
15.55 Reuters is reporting that Greece could be looking at
kicking the can into the next century – by offering a 100-year bond.
The country could offer the “century bond” in return for outstanding
short-term debt, said a banker at one of the institutions advising Greece
who said he saw the plans being studied.
But two senior Greek government officials have denied that the plan is on the
15.35 A fun tweet
from Bruno Waterfield, at the EC headquarters in Brussels.
Huge ‘No exit’ banner appears in EC’s Brussels HQ – some sort of a message
for the #eurozone?
15.25 Today is the last day of Q3, and the FTSE 100 is currently
down 14.66pc. There’s still plenty of time left today to slide further or
regain a bit of those losses, but as it stands, this is on course to be the biggest
quarterly fall since 2002.
That it is the biggest fall in 9 years is remarkable by itself, but the truly
scary part comes when you consider that it will beat 2008 and the effects of
the credit crunch…
15.09 Markets around the world are tumbling at the moment. Rising
inflation and slower growth in Europe, coupled with fears over a looming
Greek default are sending markets into the red. Talk of a solution from
eurozone leaders is doing little to calm fears.
In Europe, the FTSE 100 is down 2.4pc on the day, the CAC 40 has
dropped by 2.36pc, the DAX has lost 3.04pc and the FTSE MIB is
off by 1.8pc.
In the US the Dow Jones lost 1.21pc, the SP 500 was 1.7pc
off and the tech-heavy Nasdaq was down 1.77pc.
15.01 Troika inspectors are hard at work crunching numbers in Greece to
assess how much progress the nation has made on cutting debt and spending.
The stakes are high, as the outcome will decide whether Greece gets its next
EFSF cash injection.
The report from the IMF, the ECB and the EC could be ready in two weeks.
It will also play a crucial part in any re-examination of private sector
involvement in the next bailout package for Athens, eurozone officials have
Officials said that if growth forecasts were revised down, revenue projections
would be cut too. As a result, Greek financing needs would grow. One euro
zone official said:
The framework conditions might have changed since the last review was done
and the Greek growth forecast also. When we put all of that together we have
to see what kind of conclusions will be drawn.
Officials warned that if faced with higher financing needs, eurozone
governments would be unlikely to agree to shoulder the extra burden alone
and could ask private Greek bond holders to contribute more than the already
agreed 21pc haircut.
14.45 Wall Street has opened for business, and stocks dropped in early
trading after new data showed rising inflation and slower growth in Europe
and falling incomes for Americans.
The Dow Jones lost 1.31pc, the SP 500 was 1.57pc off and
the tech-heavy Nasdaq was down 1.70pc.
14.29 Members of the Alliance for the Future of Austria, or BZO party
held a banner calling for a “referendum now” during the EFSF vote
in Austria earlier today.
14.24 Eurozone leaders and heads of the 27 member states will meet at
an EU summit on October 17 before discussing single currency governance the
following day, according to Reuters.
14.15 Breaking: Leaders of eurozone countries look set to hold a summit
on governance of the single currency on October 18. More details as we get
14.02 More details of the Austrian EFSF vote earlier this afternoon are
coming through. Finance minister Maria Fekter addressed parliament during
the four-hour debate.
The developments of recent weeks are serious. The debt crisis is now not
only touching the eurozone but all of Europe and the Western world. I can
assure you that with all the measures taken, no matter how hard they are, we
are acting in the interests of Austria.
13.55 For those who still have any money, the Bank of England has
announced a new £50 bank note featuring entrepreneur Matthew Boulton
and engineer James Watt will be released on November. Victoria
Cleland, head of the BoE’s Notes Division said it was the first time two
portraits had appeared on the same note.
We are very pleased to announce the imminent launch of the new 50 pounds,
which will incorporate new and enhanced security features to prevent
13.46 The Business
Daily over at the BBC gets a bit Hollywood crazy as it imagines the
financial crisis as a movie. It starts: “Imagine a world where there
are no banks … From the people who brought you the collapse of Lehman
Brothers, the global financial crisis and the credit crunch, comes Debt
Again. This takes financial disaster into a whole new low.”
13.40 Futures are pointing to the DOW opening down around 0.8pc
when the market opens in just under an hour.
13.34 Financial journalist Nick
Reeve offers some light relief, but credits The
Bugle for this gem:
Investors currently feeling like German vegetarians: they fear the wurst.
13.23 The BBC’s Joe
Lynam warns Slovakia may be a “booby trap” for plans to
increase the EFSF but the Slovak deputy head of the EU’s executive, Maros
Sefcovic said it was unlikely the country would stall the deal.
I can’t imagine any renegotiation of the agreements that have been already
settled and ratified by other countries. Slovakia is risking its
trustworthiness dramatically … and causing nervousness on the markets.
13.14 The four-hour session of the Austrian Parliament has been heated
at times, with 117 MPs voting in favour while 53 voted against. Austrian
guarantees in the EFSF will double to €21.6bn.
13.08 Just in time for lunch and the Austrian Parliament has approved
the extension of the EFSF bailout.
12.55 Business reporter Rachel Cooper is watching the end of a
tough quarter for the markets on the FTSE
London’s blue-chips look set to end this turbulent quarter with a whimper
rather than a bang. The FTSE 100 is down 88 points to 5107 and is on course
for its worst quarterly fall since the collapse of Lehman Brothers.
12.48 Slovakia’s Freedom and Solidarity (SaS) party has opened up
channels to negotiate a deal on the EFSF fund that would be acceptable to
Europe and Slovakia. The party had opposed the extension of the fund given
Slovakia is the second poorest member of the eurozone.
12.32 Assistant City Editor Jonathan
Sibun has an eye on the Spanish and French markets.
Spanish and French shares set for worst three-month performance since the
second quarter of 2002. Thanks God for that short-selling ban …
12.27 The chairman of WL Ross Co, Wilbur Ross has added
his voice to the chorus of doubts about the strength of a EFSF bailout.
I’m not convinced that this bailout package is going to be remotely enough
for the euro zone itself. I think it should start with a ‘T,’ [for
trillions] not a ‘B’ [for billions].
12.13 The Slovakian Prime Minister Iveta Radicova has had a
private meeting with German Chancellor Angela Merkel, according to a
government spokesman. Slovakia is due to vote on the EFSF extension next
12.03 The euro has fallen to a two-week low of 86.51p against the
pound, Reuters reports.
12.01 Ambrose Evans-Pritchard’s latest blog, Nein,
Nein, Nein, and the death of EU Fiscal Union, is now online.
11.53 Journalist Oliver
Cooper observes domestic political point-scoring in the debate over
the euro bailout.
Austria’s eurosceptic FPÖ [Freedom Party of Austria] and BZÖ [Alliance
for the Future of Austria] have been making great hay over the #EFSF:
big vote-winners. But the EFSF will be overwhelmingly approved.
11.47 Denmark’s central bank has announced it will provide 400 billion
kroner ($72.6 billion) in emergency liquidity to the country’s banks to
salvage its under-threat recovery. Central bank Governor Nils Bernstein
released a statement today.
The expanded program is designed to supplement financial institutions’
access to taking loans and thereby build a bridge to a situation without
state guarantees, when these expire in 2012 and 2013
11.37 International business editor Ambrose Evans-Pritchard
tells us the real significance of yesterday’s German vote on the EFSF has
been overlooked. Here’s a preview of his latest blog:
The furious debate over the erosion of German fiscal sovereignty and
democracy – as well as the escalating costs of the EU rescue machinery – has
made it absolutely clear that the Bundestag will not prop up the ruins of
monetary union for much longer.
11.35 After today’s vote in Austria, the remaining countries to debate
the extension of the euro rescue fund will be Malta, Slovakia and the
11.30 Spain has given its savings banks a €7.55bn boost, according to
the BBC’s Joe
Spain has injected €7.55bn of public funds into 4 of its savings banks
(cajas) – marking the end of the recapitalization of its banks
11.18 While the debate on the eurozone bailout continues in Austria,
the UK Government has a novel idea of quite literally speeding up the
recovery. Transport secretary Philip Hammond wants to raise the speed
limit on motorways to 80mph.
Increasing the motorway speed limit to 80mph would generate economic
benefits of hundreds of millions of pounds through shorter journey times. So
we will consult later this year on raising the limit to get Britain moving.
11.13 Martin Kotthaus, a spokesman for Germany’s finance
minister, has said the Finland-Greece collateral issue is close to a
solution, Reuters is reporting.
I’m very optimistic that this interesting problem will soon be resolved.
Austrian finance minster Maria Theresia Fekter (left) as parliament
gathered to vote on expanding the eurozone rescue fund. Photo: Reuters.
10.41 The debate has resumed after Austrian finance minster Maria
Theresia Fekter was heckled so loudly she had to stop speaking.
10.31 The debate on the EFSF changes in Austria has descended into
chaos, according to Graeme
Wearden, business reporter at The Guardian.
One for euro crisis watchers: Austria’s EFSF debate is underway, and
briefly suspended amid mass heckling
10.09 Figures out this morning showed an unexpected rise in inflation
in the eurozone to 3pc, outstripping forecasts that expected consumer prices
to remain at 2.5pc. The EU’s statistics agency Eurostat said inflation rose
from August following higher inflation in Germany.
09.56 Italy received a nominal boost this morning after new figures
showed unemployment fell from 8pc in July to 7.9pc in August. However, youth
unemployment remained high, increasing to 27.6pc from 27.5pc over a month.
09.52 As we await news from Austria, it emerges sterling has fallen by
0.3pc against the dollar as speculation over more quantitative easing
The pound was down to $1.5572 after reaching a high of $1.5716 on Thursday.
09.31 The Austrian Parliament was due to convene at 10am (9am BST) to
vote on the changes to the EFSF.
09.14 Fears about the success of an EFSF bailout has caused the euro to
slide to low against the dollar today. It is likely to see its biggest
monthly loss in 10 months.
09.02 The current debt turmoil in Europe and tough financial conditions
are “driving the world towards another Great Depression,”
according to George Soros, chairman of Soros Fund Management, writing
in the Financial Times. He calls for a common eurozone treasury, ECB control
over main banks and refinancing in Italy and Spain.
Many other proposals are under discussion behind closed doors. Most seek to
leverage the EFSF by turning it into a bank or an insurance company or by
using a special purpose vehicle.
08.49 Analysts have been having some fun with the EFSF vote, according
to financial reporter Fabrizio
Goria. He tweets:
LOL of the day – Donovan (UBS): “Germany voted for the EFSF
extension. Greece celebrated by going on strike.”
08.34 Work and pensions secretary Iain Duncan Smith has hit out
at the EU for posing
a threat to the UK’s welfare reforms. He also criticises proposals
for a financial transactions tax. The plan “threatens to punish UK
banks by decreasing their competitiveness abroad,” he says.
08.27 With European markets opened down this morning, analysts
including Philip Isherwood, head of equity strategy at Evolution
Securities, are expecting the worst performance over the quarter since the
global financial crisis in 2008.
Short-term, we still have the same prospects: the timing of a Greek
default, the nature of it, how shared or otherwise; the uncertainty of
whether the (second Greek bailout) package needs to be revisited.
08.18 Last month saw a slight
improvement in UK consumer confidence, according to the GfK NOP
index. Confidence grew by one point to -30 while the outlook for families
for the next 12 months was marginally more optimistic at -27, up four
points. Nick Moon, GfK social research managing director, said it
showed Britons were feeling “a little more hopeful” about the UK
08.12 In commodities, gold has fallen by 11pc for the month, which is
the biggest drop since October 2008 when it fell by 16.8pc. Here’s the graph
08.07 More on the news breaking that New Zealand has been hit by a
double downgrade by SP and Fitch Ratings, which came as the country
faced the clear-up and rebuilding bill following the Christchurch earthquake
earlier this year. In June, external debt reached 70pc of GDP. Foreign
minister Kevin Rudd said the revision showed no countries could
ignore the economic challenges in the eurozone and US.
The truth is that, as we enter the last months of 2011, we stand again at a
critical point in economic history. A challenge the world will either
respond to decisively. Or a challenge that will be allowed to linger,
becoming harder and harder to contain the longer it is left to grow.
08.00 The FTSE 100 has opened 0.4pc down at 5175, down 22
Both the DAX and France’s CAC opened 0.6pc down. Spain’s IBEX
was down by 0.4pc and in Italy, the FTSE MIB fell by 0.6pc.
07.56 Breaking: New Zealand’s sovereign rating has been downgraded by
both Standard and Poor’s, and Fitch, becoming the second Asia Pacific
country after Japan to have its rating cut. Both agencies cut its rating
from AA+ to AA. Finance minister Bill English said the move was “ugly”.
We are not immune to the global backdrop. In particular, investors
are now reassessing their appetite for debt and credit agencies are taking a
07.48 As members of the Greek PAME trade union protested
yesterday, the atmosphere in Germany was altogether calmer.
The Volkswagen Beetle sculpture made of straw was on display in Frohnschwand,
Meanwhile, protesters burned their tax bureau statements for the extraordinary
surtax on real estate during a demonstration outside an Athens Tax Bureau.
07.40 Chairman of Roubini Global Economics Nouriel
Roubini has made the point that the markets are fearing:
EFSF I was 250 billion euros; EFSF II is 440 billion but isnt enough. EFSF
III will have to be 2 Trillion euros plus to bailout Italy/Spain
07.38 We have more from Germany’s economy minister Philipp Roesler,
who has said leveraging the EFSF fund was unnecessary this morning. He told
The German Bundestag always has the last word … I do not see any
willingness there to change the upper limits or increase the liabilities
through other ways such as leveraging.
07.36 This morning’s headlines are focusing on Angela Merkel’s victory
following the vote of confidence in plans for a euro bailout through the
The Daily Telegraph: Germany
votes to boost euro lifeline fund.
Financial Times: Germany backs rescue fund.
The Times: Merkel vote victory calms eurozone as Greece faces tests
before €8bn payout.
The Guardian: Merkel enjoys triumph in bailout
Daily Mail: German vote fails to ease euro fears.
07.29 Across Europe, markets are expected to open lower this morning
with the biggest quarterly decline in almost three years anticipated.
The DAX is set to fall by 0.3pc after the crucial vote in Germany on
the EFSF yesterday. Meanwhile in France, the CAC-40 is likely to be
down 0.5pc or eight to 14 points down.
07.25 Germany’s economy minister Philipp Roesler says there is
no need to boost the EFSF bailout fund with leveraging, Reuters reports.
07.18 In Japan, the markets were down slightly after a slow day.
The Nikkei closed down 0.01pc at 8,700.29 while the Topix closed
down 0.15pc at 761.17.
07.13 The FTSE 100 is expected to open down 17 to 30 points this
morning on the back of a nervous day watching the ratification of the EFSF
changes. In Hong Kong, the Hang Seng fell 3.7pc as the worst monthly
performance in the Asian market for three years continued.
07.09 The impact of yesterday’s vote
to expand the EFSF on the markets will become clearer today.
Meanwhile, the Asian markets have been looking a little unsteady following
news that China’s manufacturing growth was down for a third month in a row
in September. However, prices were up as China battles rising inflation. Connie
Tse, Forecast economist in Singapore said:
The trade sector no doubt faces increasing risks, but recent export growth
momentum is holding up decently. China is not facing a collapse in global
demand yet, as witnessed in 2009.
07.05 Good morning and welcome back to our live coverage of the
continuing global debt crisis. Log on throughout the day for the latest news
Read all our latest news on the financial
crisis, or take an in-depth look at events over the past month.
Debt crisis live: archive