6 Jul 2015

Greece: UK told no immediate threat to bank funding

I hear No. 10 and No.11 are not expecting precipitous action from the ECB this morning. There has been speculation that they might cut off emergency liquidity to Greek banks in the wake of the referendum.

Whitehall and the Bank of England have been reassured this will not happen this morning and a breathing space to explore what should happen next has been created.

What strikes you talking to EU partners is how few allies the Greeks have. I mentioned before the Irish prime minister’s words as he arrived at the last EU summit – we took our medicine and so should Greece. Like other IMF clients and potential clients, the Irish government can see how special treatment for Syriza now could boost Sinn Fein – for other countries you can insert other anti-austerity parties.

The government will want to reassure people with some words on exposure to Greek banking etc today but they will also want to give clear advice to tourists heading for Greece (in a few weeks’ time that includes quite a few MPs, I understand, who have holidays booked there).

Meanwhile, the chancellor will be trying to weave the Greek situation into the narrative of his budget. All the signs are that he is going for a bold budget and little would normally challenge that for coverage. Greece, on today’s evidence, might just do that.

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