Greek proposals offer glimmer of hope in bailout talks

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Markets have reacted well to the details of a new proposal put forward by Greece in tackling its burgeoning debt problem, amid concerns that a breakdown in talks could leave the country bankrupt in a matter of days.

Greece’s economy minister, Giorgios Stathakis, told the BBC that the proposals include new taxes on businesses and the wealthy, rather than increasing taxes for the mass population.

Stathakis said that rather than reducing pensions further, cutting public sector wages or increasing the tax on electricity the Government would shift the deficit to business, the rich and some VAT increases.

Also in the proposal was a targeted budget surplus of 1 per cent of GDP this year, increasing by a percentage point each year for the next two years.

Markets reacted positively to the details of the proposals, with indices across Europe rising on the news. Stocks in Athens rose by 9 per cent on the news, while investors sold the euro – seen as a sign of relief.

The FTSE Eurofirst 300 index rose 2.4 per cent, while France’s CAC 40 rose 0.7 per cent on opening and the FTSE 100 went up 11 points to 6,847 at market open.

Key officials also welcomed the news, with Donald Tusk, president of the European Council, saying Greece had presented “its first real proposals in many weeks”. Meanwhile, Jeroen Dijsselbloem, Dutch finance minister and president of Eurogroup, said it was a “positive step”.

However, things were not so rosy on the street of Greece, with a small group of protestors taking to Athen’s Syntagma Square.

It comes ahead of the 30 June deadline for Greece to repay the IMF £1.1bn, and amid warnings Louka Katseli, chair of the National Bank of Greece, that the country could default ahead of the end of June deadline.

“If an agreement is not reached, there is a risk this would mean the Greek state is considered to be in default, and this might come earlier than the end of the June,” she said.