Markets tumble as Greece reform proposals hit roadblock

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Greece’s latest proposal to EU creditors has hit another roadblock, says Greek Prime Minister Alexis Tsipras.

The Greek premier is in Brussels in discussions with Christine Lagarde, managing director of the International Monetary Fund, European Central Bank president Mario Draghi and European Commission president Jean-Claude Juncker.

The proposal put forward by Greece on Monday was met with optimism, causing markets to rise, but today Tsipras took to Twitter saying some creditors were not happy with the deal. The new proposal suggests higher taxes for businesses and wealthy people, among other revenue-boosting measures.

“The persistence of certain institutions not to accept equivalent measures, has never been done. Neither Ireland nor Portugal,” he said in Greek on the social media site. He added that the objections are either because “they do not want an agreement” or because they “serve specific interests in Greece”.

Greek stocks reacted to the news by heading south. The Athens Composite index fell 3 per cent to 770 points, while Greek bank shares also tumbled.

The news comes as S&P warns a Grexit is more likely and that, coupled with the loss of ECB support for Greece, would be a very bad scenario, reports the FT.

In a note to markets the ratings agency says: “In our baseline scenario, we continue to think that Greece will remain a eurozone member. But the limited progress in talks to date between Greece and its creditors suggests that a Greek exit is possible.

“We consider that Greece’s exit, coupled with the loss of emergency European Central Bank (ECB) financing, would bankrupt Greece’s financial system. This could in turn send negative ripples across Southeastern Europe’s Greek-owned banks.”