(menafn – ecpulse) A disappointing week has passed beginning with European finance minister’s failure to reach an agreement on how to ensure the sustainability of Greek debt; and on the other hand European leaders also continued to dispute over the blocs seven-year budget.
European finance ministers and the International Monetary Fund (IMF) failed to agree on the needed measures to reduce Greece’s debt load and didn’t make an affirmative decision on whether Greece’s second installment worth 31.5 billion Euros will be disbursed, delaying the decision till the meeting on Monday 26 with hope they reach a deal.
The ongoing disagreement between the decisions makers made investors question finance minister’s ability to containing Greece’s deepening debt crises. Hopes of merging Greece’s aid installment into one tranche worth 44 billion Euros were once again destroyed.
Despite the uncertainty looming Greece’s second aid installment, still there’s a bit of hope. German Chancellor Angela Merkel stated that she chances of reaching an agreement concerning Greece’s second tranche in Eurogroup finance minister’s next meeting to be held on November 26.
Moreover, European finance ministers held a tough and crucial summit on Thursday to agree on the blocs seven-year budget worth 1 trillion Euros from 2014-2020, yet failed to.
Merkel said another summit could be necessary early next month if no compromise can be reached in Brussels this time. If so, the budget could be spilled over into a new meeting next month, or into next years, risking long-term prospects of the euro.
Clearly, if European leaders did not manage to solve this matter, the best chances would be to go back to the old plan; a public spending package worth 937 million Euros. The decision on the spending plan must be unanimous as U.K. Prime Minister David Cameron has threatened to veto the new budget.
Positive data by Germany still helped keep the positive sentiment afloat. The European debt crises and development in Greece have caught the attention but the positive data still supported the optimism for a deal on Greece Monday that has supported the euro in the past week despite the failure in the Brussels summit. Last week, Germany reported unrevised third quarter GDP at 0.2% in addition German Business confidence strong rebound from record low in November showing signs of slow pace recovery.
Finally, The Bank of England’s Monetary Policy committee on November 8 voted unanimously to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.
Nevertheless, the BoE monetary policy committee split on the need for further QE. The decision to maintain the stock of asset purchases financed by the issuance of central bank reserves at £375 billion was not unanimous as one committee member “David Miles” preferred to increase the size of asset purchases by a further £25 billion to a total of £400 billion.