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Greek activists target sales of homes seized over bad debts

Protests thwart plans to hold around 25,000 auctions as banks struggle to sell properties to settle shortfalls

The cavernous halls of Athens central civil court are usually silent and sombre. But every Wednesday, between 4pm and 5pm, they are anything but. For it is then that activists converge on the building, bent on stopping the auctions of properties seized by banks to settle bad debts.

They do this with rowdy conviction, chanting not a single home in the hands of a banker, unfurling banners deploring vulture crows, and often physically preventing notaries and other court officials from sitting at the judges presiding bench.

Poor people cant afford lawyers, rich people can, says Ilias Papadopoulos, a 33-year-old tax accountant who feels so strongly that he has been turning up at the court to orchestrate the protests with his eye surgeon brother, Leonidas, for the past three years.

We are here to protect the little man who has been hit by unemployment, hit by poverty and cannot keep up with mortgage payments. Banks have already been recapitalised. Now they want to suck the blood of the people.

The tall, bearded brothers were founding members of Den Plirono, an activist group that emerged in the early years of Greeces economic crisis in opposition over road tolls. The organisation, which sees itself as a peoples movement, then moved into the power business restoring the disconnected electricity supplies of more than 5,000 Greeks who could not afford to pay their bills. Auctions are their latest cause. Solidarity is the only answer, Papadopoulos insists.

Rich people have political influence. They can negotiate their loans and are never in danger of actually losing the roof over their heads.

The protests have been highly effective. In law courts across Greece, similar scenes have ensured that auctions have been thwarted. Activists estimate that only a fraction of auctions of 800 homes and small business enterprises due to go under the hammer since January have actually taken place. Under pressure to strengthen the countrys fragile banking system, Athens leftist-led government has agreed to move ahead with around 25,000 auctions this year and next. In recent weeks they have more than doubled, testimony, activists say, to the relaxation of laws protecting defaulters.

There is not a Greek who does not owe to the banks, social security funds or tax office, says Evangelia Haralambus, a lawyer representing several debtors. Do you know what it is like to wake up every morning knowing that you cant make ends meet, that you might lose your home? It makes you sick.

Seated in the fourth floor office of the United Popular Front (Epam), a framed picture of Che Guevara behind her, the lawyer belongs to the growing numbers who believe Greece would be better off out of the eurozone.

We see our country as a country under occupation. It is inadmissible what has happened to Greece, she splutters. These vulture crows, homing in on the properties of the poor, are all part of the larger plan to control us.

Epam is among the fringe groups on both the left and right seeking to capitalise on the outrage over auctions as anti-euro sentiment mounts.

Few issues have highlighted prime minister Alexis Tsipras volte-face over austerity more than this. Resistance to home foreclosures was a rallying cry of the leftist leader before he assumed power in January 2015.

Tsipras decision to enforce some of the harshest austerity measures to date the price of a third bailout programme to avert default and debt-stricken Greece exiting the eurozone has exacted a heavy toll. Amid accusations of betrayal, his own popularity and that of his Syriza party, have plummeted.

The leaders much-vaunted promise that not a single home would be seized from Greeks unable to keep up with mortgage payments has become the stuff of satire played on radio shows to emphasise what is widely perceived as Tsipras hypocrisy.

But seven years into the crisis, any government would ignore non-performing loans (which will never be repaid, in full or at all) at its peril. A slowburning 106bn fuse under the Greek economy the equivalent of 50% of GDP they are regarded as the biggest risk to the banking systems stability. Some 41.3% of mortgage holders are estimated to have defaulted on loans.

Non-performing loans now account for 45% of all loans which is very high, said the Bank of Greeces governor Yannis Stournaras. It is imperative for the survival of Greek banks and the Greek economy that they are reduced. Our plans is to reduce them by about 40bn in the next three years, he added, blaming the weekly court dramas, squarely, on strategic defaulters. There are strict income criteria and property criteria that protect the poor.

In an atmosphere that has become increasingly explosive, as anti-austerity protesters again take to the streets , the anti-auction activism has also turned ugly.

Attacks against public notaries who are processing the sales have soared. Recently the downtown office of a prominent notary was ransacked by masked men belonging to an anti-establishment group who said they wanted to send a message to the crows. In court the officials are abused and booed out of the room by baying crowds.

We have been wrongly singled out, said notary Athina Karamanlis, struggling to speak above the din of protesters taunting her.

Our association has stated clearly that it will not condone the auction of primary residences. But it is our duty to follow the law. There are auctions that people want for all sorts of reasons.

The drama has forced the government to rethink its strategy. Fears are mounting that if the banks fail to recover losses, a Cypriot-style bail-in could follow and the government has announced that it will pushed ahead with electronic auctions. But the prospect of mass auctions at a click of a button has only incensed critics further.

It will create huge tensions and destabilise Greek society, said Papadopoulos, claiming that laws protecting the poor had been increasingly whittled down. They will have to evict people from their homes and that wont be easy. The people will react in unforeseeable ways.

Read more: https://www.theguardian.com/world/2017/mar/11/greek-activists-target-sales-of-homes-seized-over-bad-debts


With a French partner, Im scared for my familys future post-Brexit

Hilary Freemans life has been turned upside down by the EU referendum vote she and her family feel like pawns in a very political game

Have you heard the one about the British woman who married an immigrant just so she could leave the country? Thats the joke that Ive been telling, ever since 24 June last year, when I woke up in some kind of parallel universe to find that my compatriots had voted to leave the EU. But Im not laughing and neither are the thousands of other people in the UK who are in a similar situation.

My partner, Mickael, father of our 19-month-old daughter, Sidonie, is French an EU immigrant. As things now stand, he might not be allowed to stay in the UK. Going to live in France assuming the British will still have rights and Ill be welcome there might be the only way we can stay together as a family. Exile from my homeland or the breakup of my family: its not a pleasant choice.

When Mickael and I met, having a relationship with an EU citizen was (aside from the air miles and the language difficulties) little different from dating the boy next door. I had gone to Nice to write a book; he worked at the apart-hotel I was staying in. For the first few years, we conducted our relationship as a long-distance one, taking advantage of low-cost flights to hop back and forth across the Channel before, in 2014, deciding to settle down and start a family. Mickael moved to London primarily because I have a mortgage and because his English is better than my French. Migrating for him, as for other EU arrivals, was as simple as getting on a plane, opening a bank account, registering with the local GP and securing a National Insurance number. And yet, two years after he gave up his home and his job and learned to play the theme tune to The Archers on his harmonica, he was told Sorry, but youre no longer welcome here and you might not be able to stay.

To date, the prime minister, Theresa May, has refused to guarantee the rights of EU citizens in the UK until those of UK citizens living in Europe are also guaranteed. But this game is messing not only with the lives and futures of Europeans, but also the British lives she claims to wish to protect. What she has failed to acknowledge is that EU immigrants do not live in ghettos in the UK. The three million are intimately connected with British people, as their partners, their parents, their siblings, their grandparents. They have mortgages together, businesses together, children together. My rights and those of my daughter, also a British citizen, are being threatened by Mays refusal to promise EU immigrants that they can stay. According to article 8 of the Human Rights Act which the government hasnt yet done away with we are entitled to a family life. So why isnt she ensuring this?

My family is particularly vulnerable. Mickael has lived here for less than three years and is therefore not yet entitled to permanent residence or citizenship (you qualify after five years). He is not highly skilled. In fact, he is exactly the kind of immigrant were told the country neither needs nor wants. Except my daughter and I want and need him.

I havent slept very well since 24 June. Im still shocked, anxious and depressed by what has happened, grieving for the country I thought I lived in, for my identity and for the future I was promised. Im scared for my familys future. Most of all Im angry. You could say I have a giant bargaining-shaped chip on my shoulder. I feel like Ive been lied to all of my life, taught to think of myself as European, to take advantage of free movement, only to have the door slammed in my face at the age of 45. Even my educational choices were made because of the EU, my school persuading me to choose French A-level because the 1992 Maastricht treaty means the whole of Europe will be opening up for your generation.

You might think Im overreacting (or as the rightwing press would have it, that Im a remoaner). Most people do. Dont worry, they say. Everything will be fine. I see no evidence of this. Eight months on, and the three million EU immigrants are still being used as pawns in a political game with no discernible rules. EU families have had no assurances; we have been shown no compassion.

The second thing people say to me is: If youre worried about Mickael not being able to stay, why dont you just get married? Contrary to popular opinion, being married will grant Mickael no automatic right to live in the UK. The law quietly changed in 2012 when the then home secretary a certain Theresa May decided to put a stop to immigrants marrying Brits just so they could stay here.

Dont underestimate the levels of misery and fear Brexit has generated. Some people were actually scared to talk to me, for fear that being quoted in this article would mean their names would find their way on to a government list, and theyd be deported. This level of paranoia, whether it is warranted or not, in 21st century Britain, is deeply shocking.

A French friend Veronique Martin will speak out and say shes distraught. A writer, she has a British PhD, a PGCE and a British husband, and has lived in the UK for 30 years. Like the majority of EU citizens settled here, she didnt take citizenship because, until Brexit, it wasnt necessary. Now she finds herself caught in the legal minefield that faces any EU immigrant who hasnt been in continuous employment while living in the UK (carers, full-time mothers, disabled people, students etc) because she doesnt have Comprehensive Sickness Insurance, which was made a requirement for permanent residency in 2006. Why not? Because she was never told she needed it. Without it, she faces the possibility of deportation.

Miles and I have just celebrated 31 years together, she says. Yet our relationship is threatened by the British government. I came here in good faith, was told to consider Britain as my home, built my life here, yet overnight, through no fault of my own, Im being treated like a pariah. My only sin was to fall in love with a country that until now had welcomed me, and with a wonderful British man.

My husbands human rights are also being trampled on. His EU citizenship is going to be forcefully removed from him, and with it his freedom of movement. Where are we supposed to live? Is it moral or democratic or even just respecting basic human rights to separate families and couples? Where has my beloved, tolerant and open Britain gone? Where should we go?

The psychotherapist and philosopher Professor Emmy van Deurzen says she has numerous clients in cross-national relationships who are struggling with Brexit. I think the terror that has struck at the core of EU citizens is hard to understand, even for their British spouses. In one couple I work with, the British husband is finding it hard to believe that his Greek wife might no longer be allowed to stay in the country, having had no health insurance, and the wife is feeling greatly diminished and terrorised, and having nightmares about having to leave on a ship to escape from persecution. I work with a Polish lady who is remembering her parents war stories and feels she is reliving these at the moment.

I dont think people in the UK quite appreciate how EU citizens living here are beginning to feel like second-class citizens and therefore potentially fear becoming refugees. The sense of safety and individual rights that we normally take for granted has exploded, and it takes a lot in couples or families that are multi-national, to encompass and share those tensions equally. We are really creating a situation of grave human distress, which will channel down the generations, exactly as did the wars.

My head is telling me there will be no mass deportation of EU citizens. Not because of any benevolence on thepart of the government, but because it would be a logistical and bureaucratic nightmare. For one thing, there is no register of EU arrivals, so just working out who is here would be close to impossible.

Whatever happens to Mickael and me, at least our daughter Sidonie will be able to live freely in whichever country she chooses. She is a dual national, entitled to both passports. As the granddaughter of German Jewish Holocaust refugees, I am in the process of obtaining a German passport, so that if I do have to move to France, I will still be an EU citizen with whatever rights that grants me.

Even if Mickael were to be offered permanent residency in the UK, that status would be revoked if he left the country for longer than a few months. Then we would not be able take our daughter to live in France to experience French culture and to embrace the French half of her identity. That is why, for us, as for many other thousands of people who dont wish to see the breakup of their mixed UK/EU families, only free movement will do. Otherwise, one partner will find themselves, whether willingly or unwillingly, for ever exiled in the others nation.

Read more: https://www.theguardian.com/lifeandstyle/2017/feb/25/with-a-french-partner-im-scared-for-my-familys-future-post-brexit


Will New York get a Brexit boost to cancel out feared ‘Trump slump’?

While European cities led by Paris and Frankfurt wage campaigns for Londons financial business, some experts predict New York could benefit most of all from the fallout of Brexit on the UK capital

New York and London function as two prongs of one global economy. Banks and other financial companies headquartered in New York usually have their second biggest offices in the British capital, and vice versa.

For years, thats made economic sense. For London-based companies, New York provides an unparalleled density of financial firms, a regulatory framework in which to do business, and access to non-European markets. London provides much of the same for New York-based companies who need access to European markets.

Unfortunately for London, at least Brexit could change all of that: an isolated UK could mean financial firms would have a hard time accessing and doing business with other European markets. And while several EU rivals, from Frankfurt to Paris to Madrid to Amsterdam, are waging campaigns for Londons financial businesses, New York with its already established financial sector and finance-friendly regulatory environment could get the majority of Brexits financial runoff, according to some experts.

And this has New Yorkers bracing for a wave of British capital that could affect not only the financial industry but the entire city, from cultural production to housing.

People financial people, consultants, bankers already started calling looking for apartments two or three months ago, says Gennady Perepada, a real estate consultant who specialises in helping foreign millionaires and billionaires buy apartments in New York. Any problem thats not in New York is good for New York.

London and New Yorks financial industry rivalry goes back decades, and the two cities jockey for the title of biggest financial centre each year. According to Z/Yen, a London-based business think tank, London currently outranks New York by just one point on their scale. The next financial centre, Singapore, is 42 points behind New York.

The
The New York Stock Exchange on Wall Street. Photograph: Spencer Platt/Getty Images

In other words, New York and London stand alone as centres for global finance, far ahead of the competition. Thats for a few simple reasons: both have a tremendous density of talent, they house large groups of ancillary financial service professionals lawyers, accountants, consultants and, most importantly, their clearing houses (the places where investors and sellers can trade in complex financial instruments) are the worlds most developed, meaning London and New York are the only places where all of the worlds major currencies can be traded.

The UK has over one million people employed in finance, says Vincenzo Scarpetta, a senior policy analyst at the think tank Open Europe. The whole city of Frankfurt, by comparison, has 725,000 inhabitants. So there are only a few global centres where the industry can really go.

Indeed, New York is such an obvious choice for capital fleeing from London post-Brexit that it seems, unlike other European cities, it hasnt had to move a finger to convince British investors to consider taking the leap.

Ive talked to CEOs who are being heavily wooed by Paris, Amsterdam, Dublin, Frankfurt. Theyve sent out delegations, had formal presentations, says Kathryn Wylde, CEO of the Partnership for New York City, which represents and lobbies for the financial industry and other corporations here. Is New York doing anything similar? No.

Wylde and others say its because New York already has more immediate advantages: a larger talent pool than any of those cities plus more English speakers, and a pre-existing regulatory system for complex financial transactions such as derivatives.

But its also because any benefit for New York will take a while to materialise, so theres no rush to woo financial firms. Wylde envisions a slow bleed from Britain, not a flood: the majority of jobs in financial services are mid-level jobs, she points out, and the expensiveness of New York makes it unlikely companies would uproot their support and administrative staff for its shores.

Anti
Rents have already skyrocketed in New York. Photograph: Pacific Press/LightRocket via Getty Images

Instead, she says, headquarters of financial institutions that need to attract top international talent would be the ones relocating but slowly. These are long-term implications that really depend on how Brexit shakes out.

In New York, however, nearly every industry is tied into finance, and the industries most closely associated with it such as real estate are already feeling impacts post-Brexit, albeit at a low level.

Money-seeking New York or London will now fall in New York instead, says Will Silverman, managing director of investment sales at Hodges Ward Elliott, a commercial real estate investment firm based in London which recently opened offices in New York. But its probably actually less impactful than people thought it would be, especially if Brexit takes forever, and is walked back at all.

Still, some New Yorkers are worried about what global market fluctuations will do to the city. New Yorks theatre scene, for example, is heavily reliant on British and other foreign capital.

Whenever theres a global event, investors and consumers freeze up and stop reaching for their wallets, says Ken Davenport, a long-time Broadway producer. But there hasnt been a freeze yet, and he says that even with Brexit, people need to be entertained, so hes not too worried.

Im more worried about what Brexit will do to the West End than to Broadway, he adds.

The biggest concern, it seems, comes from New Yorks most vulnerable, who have been increasingly destabilised by the citys globalised economy. Rents in New York have skyrocketed in the last decade, and that means any new wave of capital fleeing Britain and entering New York could put further pressure on previously poor neighbourhoods already feeling a housing crunch, leading to even more evictions and rent increases.

In Brooklyn for example, many condo projects rely on billions of dollars from foreign investors seeking to place their money in economies more stable than those of their home countries. If the UKs economy destabilises because of Brexit, there could be even more capital finding its way into buildings in vulnerable neighbourhoods.

A lot of the rent-stabilised buildings here are being bought up by foreign investors, says Imani Henry, an anti-gentrification activist in the Flatbush neighbourhood of Brooklyn. Theyre being wooed with citizenship and tax breaks, and meanwhile we have entire blocks of businesses closing because of high rents.

Ironically, for those nervous about the effects of Brexit, Donald Trump may yet prove their saving grace. His election as the 45th US president may destabilise its economy enough to overwhelm any effect that capital from the UK could have on New York.

If the UK has excluded itself from the world economy, New York will gain. That was my first thought, until Trump was elected, says Richard Florida, director of cities at the Martin Prosperity Institute at the University of Toronto. Trump is worse for the global economy than Brexit, so they kind of balance each other out.

Follow Guardian Cities on Twitter and Facebook to join the discussion

Read more: https://www.theguardian.com/cities/2017/jan/24/new-york-brexit-boost-trump-slump-fears-financial-business


One month after the referendum, are predictions of Brexit blight coming true?

Though the Leave vote hit share values hard, many have recovered. But other sectors of the economy will be counting the cost for years

The overall impact of the historic referendum that saw the UK unexpectedly vote to leave the European Union has so far, in the space of a month, been less severe than some of the more apocalyptic warnings had suggested. But there have been winners and losers across the economy.

The pound

Sterling went on a rollercoaster ride on referendum night, ending up down 8% against the dollar as the results confirmed a victory for the Leave camp. Since then, its decline has continued and the pound is now at levels not seen since 1985, having lost about 12% against the US currency. Compared with the euro, the pound has fallen by 9% since the vote and is at a three-year low making holidays in euroland more expensive.

The decline comes as investors worry about weakness in the UK economy and the prospect of interest rate cuts to boost demand. This month the Bank of England left rates on hold but said most members of its monetary policy committee expected a cut in August if the economy did not improve.

The weak pound is a boon to exporters but will make imported goods more expensive. On Thursday, Unilever the business behind brands including Dove, Flora, Bertolli, Hellmans and Persil became the first major food and consumer goods company to warn that companies were likely to pass on increased costs to customers.

Stock markets

Markets were caught by surprise by the Leave result and a record $2tn was wiped off the value of global shares. But since then, there has been something of a recovery, particularly for the FTSE 100, which has regained all lost ground and more, and is currently at 11-month highs. However, the leading UK index is chock-full of companies with international operations, which are less exposed to any slump in the UK economy, and which earn in dollars, thus gaining from the new lower exchange rate.

The weak pound has also raised the prospect of UK-listed companies being snapped up by foreign rivals because suddenly they look cheap. Just last week chip designer ARM agreed to be taken over by Japans SoftBank for 24bn, while South African retailer Steinhoff has agreed to buy Poundland. Analysts believe more deals will follow.

Markets have also been lifted by bargain hunters who believed valuations had fallen too far, as well as by the quick resolution to the political crisis threatening to engulf the government following Theresa Mays appointment as prime minister.

However, the mid-cap FTSE 250, which is more exposed to the UK economy than the 100 index, has yet to reach the level it was sitting at before the referendum result, despite recovering more than 13% from its lows. It is now down 2% from its pre-Brexit level.

Housing market

There has been a spate of profit warnings from estate agents, and many are making gloomy forecasts for the rest of the year. Agents in some upmarket parts of London have reported a bounce in interest from overseas buyers keen to take advantage of weak sterling, but for the mainstream market there are signs both interest and price growth have cooled.

On Friday, LSL, Britains second-biggest estate agent group owner of Your Move and Marsh & Parsons among others said business had slowed since the vote and warned that its annual profits would be significantly lower than anticipated. London-focused Foxtons issued a similar warning in late June.

Forecasts for the rest of the year are for falling interest from buyers and price drops, particularly in the most expensive parts of the market. French bank Socit Gnrale said last week that a price correction of even 40-50% in the most expensive London boroughs could be possible.

The Royal Institution of Chartered Surveyors (Rics) says its members expect sales to slump over the summer, because buyer inquiries fell significantly in June. Ricss findings were cited by the Bank of England when it announced that it was revising down its forecast for price rises.

Housebuilders

Shares in housebuilders lost around 40% of their value in the immediate aftermath of the Brexit vote, with investors worried that an economic slowdown in the UK would hit their business, despite the country seeing record low interest rates.

There has been some recovery since then, but the companies have failed to regain all their losses. Barratt Developments, Britains biggest housebuilder, is still down around 28%, and it has said that it may build fewer homes because of the current uncertainty.

Even before the vote, upmarket rival Berkeley had warned in June of a 20% drop in reservations of new homes.

Barratt
Barratts share price is down 28%. Photograph: Bloomberg via Getty Images

Commercial property

The commercial property market was already stalling in the months running up to the referendum as investors put plans on hold to await the result. The UKs decision to leave the EU has not encouraged them back.

Rics said last week that there had been a significant drop in confidence and demand among investors and tenants since the vote. Both rent and capital value expectations are now in negative territory, it reported, adding that office and retail properties have been hardest hit.

Funds invested in commercial property were forced to close their doors for a while, as panicked savers tried to withdraw their cash. Those barring withdrawals included funds run by Standard Life, M&G Investments and Aviva Investors. Last week, they started to reopen for business, but some investors who want to get their money out will take a hit. Aberdeen Asset Management, for example, is adjusting payments downwards by 7%.

Banks

The banking sector has been hard hit by the Brexit fallout, thanks to a combination of low interest rates, worries about future access to European financial markets and the prospect of a general downturn.

With expectations of another rate cut in August, the banks are braced for more strain on their stretched balance sheets, at the same time as the economy is slowing and the risk of bad debts is increasing.

Moreover, so-called passporting arrangements, under which banks can sell financial products throughout Europe even though the UK is not part of the single currency, could come under threat after Brexit.

Banks most exposed to the UK market have been hardest hit, with Lloyds Banking Group and Royal Bank of Scotland down 25% and challenger bank Virgin Money falling 35%.

Profit warnings

Estate agents have been the only businesses to issue profit warnings following the Brexit vote. However, British Airways owner International Airlines Group was quick off the mark to say the uncertainty would hit demand, closely following by easyJet. Last week, the budget airline added that the fall in the pound had cost it 40m.

Other travel companies are also suffering as, along with increased concerns about terror attacks, they face the prospect of UK holidaymakers ditching more expensive overseas trips and staying at home.

But executives at Heathrow airport said on Friday that the Leave vote had been good for business, with the falling pound encouraging international visitors to spend more in its shops, as well as making it easier to raise money from foreign investors.

FIRST SIGNS OF ECONOMIC IMPACT

The first real sign that Brexit is having an impact on the economy emerged last Friday, with a Markit survey showing business activity in services and manufacturing shrinking in July at its fastest rate since the global financial crisis in 2009. The data suggested that UK GDP could contract by 0.4% in the third quarter, according to Markit.

Until then, the data had been equivocal. The International Monetary Fund, which before the referendum had warned of possible recession if the Leave campaign won, cut its forecast for UK growth in 2017 by 0.9% points to 1.3% from its April estimate. But that is still similar to its forecasts for Germany and France.

A report from the Bank of Englands regional agents last week showed that a majority of firms were not planning to mothball investment or change their hiring plans.

The latest job figures looked upbeat: showing unemployment at its lowest level for more than a decade, with 31.7 million people in work in the three months to the end of May 176,000 more than for the three months to February 2016.

On the high street, however, the volume of retail sales fell by 0.9% between May and June. This compared to a rise of the same amount in the previous three months, and showed the effect of falling consumer confidence in the run-up to and immediate aftermath of the EU vote.

This was backed up by a survey from the British Retail Consortium and KPMG showing retail sales in the three months before the vote at their weakest for seven years, while market research group GfK recorded the biggest slide in consumer confidence for 21 years in a one-off poll following the referendum.

Inflation is on the rise, with official figures showing that dearer air fares and driving costs helped to push the consumer price index up by 0.5% in the year ending in June, up from 0.3% previously.

With higher prices on the way after the Brexit vote, inflation could breach its 2% target during 2017.

Read more: https://www.theguardian.com/business/2016/jul/23/brexit-one-month-after-referendum-blight-predictions


UK loses triple-A credit rating after Brexit vote

Standard & Poors issues downgrade and pound hits 31-year low despite chancellors attempts to soothe markets

The UK has been stripped of its last AAA rating as credit agency Standard & Poors warned of the economic, fiscal and constitutional risks the country now faces as a result of the EU referendum result.

The two-notch downgrade came with a warning that S&P could slash its rating again. It described the result of the vote as a seminal event that would lead to a less predictable stable and effective policy framework in the UK.

The agency added that the vote to remain in Scotland and Northern Ireland creates wider constitutional issues for the country as a whole.

S&P was the last of the big three ratings agencies to have a blue-chip rating on the UKs credit-worthiness. Moodys, which stripped the UK of its top notch rating amid the austerity cuts of 2013, said last week it might further cut its view of the UK.

Rating agency moves have the potential to make it more expensive for the government to borrow.

The S&P move came after another torrid day on the financial markets. The pound hit fresh 31-year lows and 40bn was wiped off the value of the UKs biggest companies on Monday, despite efforts by George Osborne to quell investors concerns about the economic and political ramifications of the Brexit vote.

After three days of silence, the chancellor made a statement on Monday morning to try to calm the markets. However, sterling remained under sustained pressure on the foreign exchange markets as economists slashed their forecasts for UK economic growth. Wall Street was also weaker while continental bourses sold off sharply after Fridays record $2tn of losses on global stock markets.

Expectations are mounting that the Bank of England will cut interest rates possibly to zero from their historic low 0.5% to stimulate the economy, and yields on government bonds fell below 1% for the first time, which could spell cheaper mortgage rates.

In a live broadcast just after 7am, as dealers in London braced for another day of turmoil, Osborne insisted: Our economy is about as strong as it could be to confront the challenge our country now faces.

But moderate losses on the FTSE 100quickly deepened and at one point sterling was down 3.5% against the dollar, at $1.3122, its lowest level since 1985. Against the euro, the pound was down 2.4% at 1.19.

Speaking at the World Economic Forum in China, Nouriel Roubini, economist at New York University, described Brexit as a major significant financial shock that would create a whole bunch of economic, financial, political and also geopolitical uncertainties.

By the end of trading, the FTSE 100 index was down 2.6%, or 156.5 points, and below 6,000. The FTSE 250, the next tier of companies and more closely tied to the UK economy, was down 7%, coming on top of a 7% fall on Friday.

Its been another dramatic day of trading on the UK stock market, said Laith Khalaf, senior analyst at the financial firm Hargreaves Lansdown.

Companies likely to be impacted by a Brexit-induced recession were hit hard. In two days, about 40bn has been wiped off the value of banking stocks and 8bn off housebuilders. At one point, shares in the bailed-out Royal Bank of Scotland plunged 25%, while housebuilders such as Persimmon and Taylor Wimpey have lost more than 40% in just two trading days.

Michael Hewson, chief market analyst at CMC Markets, said while Osbornes statement had been measured his comments were unable to prevent the feeling that UK politics remains in a state of paralysis, with no clear contingencies in place to deal with the fallout of a leave vote.

The biggest faller in the FTSE 100 was short-haul airline easyjet, which plunged by 22% after warning that wary consumers would now rethink their travel plans. Exchange rate movements, the carrier added, would add 25m to costs.

Another profit warning came from the London-focused estate agent Foxtons. Its shares dived 25% after it said Brexit would hit sales for the rest of the year. Shares in so-called challenger banks such as Virgin Money were also pummelled.

Osborne spoke after it emerged that the Bank of England governor, Mark Carney, had cancelled a trip to Portugal to remain in the UK to oversee any response from Threadneedle Street.

The Banks financial policy committee, set in the aftermath of the financial crisis to look for threats to stability, will meet on Tuesday, when the Bank of England will again offer emergency loans to banks as part of its Brexit planning.

The fallout from the vote is being felt around the world. Italys main index fell 4%, extending Fridays record losses of 12.5%. In Germany and France there were losses of 3%. At the time of the London close, on Wall Street the main share indices were all down more than 1%.

The chancellor may have taken some comfort from the fall in yields on 10-year government bonds. Yields on these gilts, which move inversely to prices, fell below 1% for the first time. This fall in gilt yields will keep government borrowing costs down and lead to lower mortgage rates. However, they also mean pension companies have started cutting the amount paid to the newly retired.

Osborne refused to repeat his pre-vote warning of a Brexit recession, saying only that the economy would face adjustments. But analysts started to cut their forecasts for UK growth. Goldman Sachs, forecasts just 0.2% growth in 2017, down from 2% predicted previously.

The consultancy Oxford Economics said interest rates could be slashed to 0% within weeks. Morgan Stanley analysts said European and UK stocks would fall up to 10% over the coming months and sterling would fall to between $1.25 and $1.30.

Much of the markets focus has been on the pound, particularly after the speculator George Soros, who made $1bn when sterling fell out of the exchange rate mechanism in 1992, had warned of a black Friday in the event of Brexit. His spokesman stressed that he had not bet against the pound last week.

George Soros did not speculate against sterling while he was arguing for Britain to remain in the European Union, the spokesman told Reuters. However, because of his generally bearish outlook on world markets, Mr Soros did profit from other investments

Read more: https://www.theguardian.com/business/2016/jun/27/property-and-financial-shares-slide-as-referendum-fallout-hits-stock-markets


Greece pushes fresh austerity drive through parliament

Alexis Tsipras gained approval by 152 of 153 of his deputies, despite many of them having previously rejected the proposals

The Greek parliament has approved a fresh round of austerity incorporating 1.8bn in tax increases and widely regarded as the most punitive yet amid hopes the move will lead to much-needed debt relief when eurozone finance ministers meet this week.

Alexis Tsipras, the prime minister, mustered the support of 152 of his 153 deputies on Sunday to vote through policies that many have previously rejected.

Addressing the 300-seat house during the heated three-day debate that preceded the ballot, Giorgos Dimaras, an MP in Tsiprass leftwing party, said he was appalled at being forced to support measures he had spent a lifetime opposing.

I am in mourning, he said. This is what can only be called wretchedness.

As parliamentarians had prepared to vote, large crowds of protestors took to the streets with Panaghiotis Lafazanis, a former minister who broke ranks with Syriza to form the Popular Unity party, taking the demonstration to the foot of the building itself where he unfurled a giant banner proclaiming: The memorandum will not pass.

The belt-tightening legislation, outlined in a 7,500-page omnibus bill, includes measures that range from the taxation of coffee and luxury goods to the creation of a new privatisation fund in charge of real estate assets for the next 99 years. Under the stewardship of EU officials, the body will oversee the sale of about 71,500 pieces of prime public property in what will amount to collateral for the 250bn in bailout loans Greece has received since 2010.

They are with the exception of the Acropolis selling everything under the sun, said Anna Asimakopoulou, the shadow minister for development and competitiveness. We are giving up everything.

The multi-bill, which also foresees VAT being raised from 23% to 24%, is part of a package of increases in tax and excise duties expected to yield an extra 1.8bn in revenue. Earlier this month, Tsiprass leftist-led coalition endorsed pension cuts that were similarly part of an array reforms amounting to 5.4 bn, or 3% of GDP.

At the behest of the EU and International Monetary Fund, the government has agreed to adopt tighter austerity in the form of an automatic fiscal brake referred to as the cutter in the Greek media if fiscal targets are missed.

Despite official claims that goals will be achieved, there is a high degree of scepticism as to whether this is feasible. The Greek economy has seen a depression-era contraction of more than 25% since the outbreak of the debt crisis in late 2009, and with high taxes likely to repulse investment, economic fundamentals are also unlikely to improve.

We are talking about indirect taxes, property taxes and income taxes all going up, Asimakopoulou said. Nobody will be able to pay them, targets will be missed, more austerity will be imposed and of course public rage will have to be vented. People will not only feel angry, they will feel conned.

The measures the ultimate U-turn for a government that once pledged to eradicate austerity are the latest in a set of prior actions Athens must take to complete an economic review that will unlock desperately needed bailout funds to avert default. The country has to meet 3.5bn in debt repayments this summer, starting with a 300m loan instalment to the IMF on 7 June money the country simply does not have.

Eager to avoid more drama before next months in/out EU referendum in the UK, general elections in Spain and regional polls in Germany, lenders have indicated they will disburse the loans at Tuesdays Eurogroup meeting. Berlin, which has provided the bulk of Greeces emergency aid, signalled the instalment could be as much as 11bn more than twice the original 5.4bn, according to the German financial daily Handelsblatt.

But creditors are still fiercely divided over the red-button issue of tackling Athens staggering 321bn mountain of debt. Although the EU and IMF now both concede the load is unsustainable, member states reject outright the prospect of a debt writedown for fear of losses on bailout loans. Euro finance ministers insist that if it is ever to recover, Greece has to achieve a primary budget surplus of 3.5%, excluding debt repayments. They have hinted that at most, they will agree to discuss debt relief when the countrys current – and third bailout programme expires in 2018.

The quarrel deepened last week when the Washington-based IMF, which has openly questioned Athens ability to achieve such a high surplus, proposed that Greece defer all debt repayments until 2040 and extend its repayment period with maturities that would run through 2080 on a capped interest rate of 1.5%. The standoff is expected to intensify on Tuesday.

Addressing parliament on Sunday, Tsipras insisted it was a huge achievement that Greece had finally succeeded in putting the debt issue on the table. Previous governments had done little more than kowtow to creditors without ever dealing with the source of Athens financial woes, he said.

No other party but the left could pass such measures, said Nikos Athanasiou, who has watched the crisis unfold from the kiosks he runs facing parliament in Syntagma square. If the right were in power Athens would be in flames.

Read more: https://www.theguardian.com/world/2016/may/22/greece-to-unveil-fresh-round-of-austerity-to-unlock-bailout-funds


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