The new left-wing star of Greek politics is gambling that the European Union cannot afford to kick Greece out of the euro. Alexis Tsipras of the Radical Left Coalition (Syriza), which took a surprise second place in the May 6 election and is expected to win a rerun, wants to rip up the harsh terms of Greece’s international bailout agreement while remaining in the common currency. After a week of high drama, he refused again last night to join a power-sharing government with pro-bailout parties, accusing them of wanting to implement a “criminal” agreement. Syriza brushes off threats by European policymakers that Greece will be forced from the euro if it reneges on the bailout deal. “We really believe that at this moment a possible exit of the Greek economy from the Eurozone would have a very, very big cost for the Eurozone as a whole,” Gabriel Sakellaridis, Syriza’s economic coordinator, told The Times yesterday.
Britain’s borrowing costs fell to their lowest level since records began, as investors dashed for the safety of gilts in the midst of heavy stock market falls. Renewed fears of an imminent Greek exit from the euro sent stock markets across Europe tumbling, as the region’s debt crisis entered a dangerous new phase. With stock markets tumbling in every European capital, the interest rate on UK gilts, perceived as a relative safe haven from Eurozone chaos, fell to 1.87 per cent, The Daily Mail reports.
One of Britain’s largest energy suppliers has tried to win over consumers by promising not to raise bills this year, despite rising wholesale prices. The German-owned E.ON claimed that its pledge to keep its average annual bill at a near-record £1,223 would provide “peace of mind” for its five million customers. The move comes after the warning on Friday by Centrica, parent company of British Gas, that annual bills for its customers were likely to rise by £100 this year. The country’s biggest supplier blamed higher wholesale prices and other costs. No other member of the so-called Big Six — which also include EDF Energy, RWE npower, SSE and ScottishPower — has made a similar pledge, The Times reports.
Oil prices could double over the next decade with sweeping implications for the global economy, according to a report commissioned by the International Monetary Fund. As oil prices remain at historically high levels of around $110 (£68) a barrel, the working paper warned a combination of rising demand and constrained supply could have major consequences. “Our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade,” the report’s authors concluded. “This is uncharted territory for the world economy, which has never experienced such prices for more than a few months.” They said that research suggested energy accounted for up to 50% of overall gross domestic product, meaning “the implications of lower oil output growth for GDP could be very large.” Persistently high oil prices are already threatening the global economic recovery according to a director of the International Energy Agency, The Telegraph reports.
George Osborne accused Angela Merkel of damaging Britain’s economic interests after she speculated that Greece would leave the euro. Speaking after he arrived in Brussels for meetings with other European finance ministers about the worsening Eurozone crisis, Mr Osborne implied that the German chancellor was destabilising the global economy. “The Eurozone crisis is very serious and it’s having a real impact on economic growth across the European continent, including in Britain, and it’s the uncertainty that’s causing the damage,” said Mr Osborne, the Chancellor, according to The Telegraph.
British businesses face a £100bn drain on their finances over the next three years as they top up ailing final salary pension schemes, according to new research. The cost of plugging soaring pension deficits threatens to eat up as much 13pc of companies’ total £750bn of cash balances, diverting money away from vital investment in jobs and growth, Pension Corporation warned. The extra funding is needed despite £80bn of deficit reduction payments made by business in the past three years. The Bank of England’s £325bn quantitative easing (QE) program has been blamed for causing the shortfall, by forcing down gilt yields and making it more expensive to buy annuities. Pension Corporation has estimated that QE added as much as £74bn to pension deficits, The Telegraph reports.
Plus Markets, the British stock exchange for small companies, said it planned to shut itself down after failing to attract an acceptable takeover offer. The loss-making group, which put itself up for sale in February, has informed Britain’s financial regulator that it plans an “orderly closure” after suffering a drop in its cash reserves, it said on Monday. “The regulated actives of the group will be wound down over a period of up to six months in order to minimise market disruption,” the company said in a statement. Plus Markets said it would help the companies whose shares are traded on its exchange, including football club Arsenal and brewer Shepherd Neame, find “suitable alternative arrangements,” The Telegraph says.