Greek market rallies as new government moots debt deal

Greek market rallies as new government moots debt deal

The Greek market rallied on Tuesday as the embattled nation’s finance minister launched a charm offensive to reassure markets the newly elected government was not reneging on its debt obligations.

This week Yanis Varoufakis has been travelling across Europe, visiting London on Monday following a stop-off in France last week, to renegotiate Greece’s bailout package.

The market has welcomed Mr Varoufakis’s efforts and the Athens Stock Exchange General index closed 11.27 per cent higher at 840.6 points today.

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The finance minister was nominated as the chief negotiator with the European Union following the recent Greek general election, where the left-wing Syriza party secured victory.

Greece, as a result of its EU bailout, currently owes in the region of €323bn (£244.6bn) but the weight of the loan has only served to shrink the Greek economy, which has seen its debt as a percentage of GDP rise.

Germany has already reiterated its position that no further debt write off is going to happen and has added that social and fiscal reform has to remain as part of any deal.

But Rowan Dartington Signature director Guy Stephens believes there is some positive news in the form of a “bailout two”, package, which he said “perhaps goes some way to explaining why the equity markets are relatively calm”.

“Without economic growth and a recovery in business confidence and employment, cutting spending and raising taxes only serves to cut off the legs of the economy when it is already on its knees,” he said.

“It will never recover in that environment and brings economic depression with it as a downward spiral takes hold.

“If the Greeks can broker a successor to the current bailout package, which is available to other indebted nations, whereby interest payments are suspended and debt repayment and the resumption of interest payments are delayed until there are robust and concrete signs of economic recovery, then we may have something to look forward to.”