I do appreciate the suffering the Greek people are going through. The Greeks must know that through measures of growth and supporting activity, we will move towards them.
20.45 They may be the largest economies in Europe, but English is still the lingua franca of the French and German leaders “when the interpreters are not around,” Mrs Merkel says.
20.42 Mr Hollande says that "without growth, whatever efforts we produce, we will not reach our targets."
20.40 Mrs Merkel says that countries in a single currency should “never go to war with each other."
20.33 Mr Hollande calls for growth measures that are backed by "tangible actions". He wants leaders to put "everything on the table" at the upcoming summits. He says they should consider a range of measures, improving competitiveness, mobilising funds, and even eurobonds. "Everything needs to be examined [...] and then we draw the conclusions," he says.
The two leaders speak in Berlin on Tuesday (Photo: Reuters)
20.30 Mr Hollande wants to “mobilise the new generation” in the eurozone through a range of growth measures.
On Greece, he says:
we had to talk about Greece […] I would like Greece to remain in the eurozone. Efforts have been made on both sides. So we have to allow the Greeks to find solutions. They are going to be consulted through new elections on June 17. I wish that Greeks will express through these elections how attached they are to the eurozone.
20.28 Mr Hollande, who had not met Mrs Merkel until tonight, describes the Franco-German relationship as a “constant force” with “very strong ties”. He says it is a “very balanced and respectful relationship”.
20.22 Mrs Merkel says this meeting is the start of several meetings to come later this month and in June.
She reiterates that "we wish to have Greece within the euro and we know the majority of Greek people agree with us". She says that the pair talked about "what we can do to help Greece".
"We want Greece to remain part of the European Union and eurogroup," she reiterates.
20.18 The press conference has started. Mrs Merkel welcomes Mr Hollande and says the lightning that hit his plane earlier could even be a "good omen" (!).
19.41 Or not. We can expect to hear from Frangela shortly - they're doing the sound checks as I type. For the French and German speakers out there, their presser will be broadcast live here in French, and here in German. If, like me, you speak neither, it's also on BBC and Sky News.
19.19 It could be quite late before we hear from Frangela. For a start, Francois Hollande arrived more than an hour late after his plane was hit by lightning, forcing him to turn back and board another flight. Once safely in Berlin he was greeted with full military honours and whisked into initial talks, then there will be a news conference and a working dinner. Quite a busy day for the brand new French President...
19.06 The Fake Angela Merkel making a nice lightning pun here, at the same time as coining a new portmanteau: Merkozy is dead, long live Frangela.
18.56 As soon as we mention the red carpet, Francois Hollande arrives in Berlin. He will now enter talks with Angela Merkel and make a statement later in the evening.
18.46 The red carpet is being laid out in front of the German Chancellery at the moment (apparently by camouflaged workers), ready for Francois Hollande.
18.24 Voting is still very much open in our poll, but it's worth taking a look at the results so far...
18.14 We had François Hollande's plane being hit by lightning as he made his way to Berlin, now we have a truck crashing in New York, spilling 36,000lbs of Greek yoghurt. Are we to take these as bad omens?
17.59 Official Eurostat data showed today that the eurozone escaped a technical recession - just - but David Owen of Jefferies has just issued a report claiming that the main reason was that the extra day this year wasn't accounted for:
...make no mistake the region is very likely back in recession. What we do not know at this stage is how severe this second down-leg will prove to be. Adding to the uncertainty surrounding today’s release was the additional working day implied by this being a leap year. GDP data is working day adjusted, but Eurostat leaves it to the individual national agencies to adjust their own series. According to the German Statistical Office, for example, the additional working day boosted German by 0.4% on the year to Q1 2012.
17.43 This is how the euro ends – not with a whimper but a bang - writes Jeremy Warner.
With Greece unable to form a government and therefore now set on new elections, how's this going to pan out? Very badly, is the almost certain answer.
The outcome of the last election was basically just a protest vote – the Greeks are against austerity, against the programme, but they also want to stay in the euro. They want to have their cake and eat it too, and they are gambling that when the Germans come to look into the abyss and realise the devastation a Greek exit will cause, they'll give them the cake – oh, and let them default on all their external debts and provide big Marshall Plan style grants to rebuild their shattered economy to boot.
Next month's election will be different. Even the Greeks must realise that it's now a straight choice – the programme or the dreaded drachma.
17.29 Reports suggest that - all being well - François Hollande will land in Berlin at 8.30pm.
17.16 Despite the slightly ominous nature of Hollande's travel problems, he's not one to give up easily (he has just collected the keys to the Élysée Palace, after all): he's already on another plane and making another attempt for Berlin. Hollande can take some comfort from the fact that lightning never strikes twice in the same place...
17.08 François Hollande was due to speak with Angela Merkel today, running straight from his swearing-in ceremony to the airport and on to Berlin. First we heard that he was 40 minutes late for his flight - not that flights leave without the French President if he's running late - now we hear that it's been struck by lightning and forced to turn around and return to French soil.
A slow clap for Channel 4's economics correspondent Faisal Islam for his speedy tweet:
And The Sunday Times's Iain Dey says:
17.04 The pound's rise against the euro has been given a further nudge by today's news. One pound will now buy you €1.2551. Handy for tourists heading to the continent, but a further burden for UK companies which export to Europe.
16.50 European markets have closed for the day, shaken downward by failure on the part of Greek politicians to form a government. Neil Veitch, fund manager at SVM UK Opportunities fund, said:
With the resumption of sovereign debt concerns, investing is again akin to playing chess on three levels - the micro, macro and political - with a myriad of different outcomes and probabilities.
The FTSE 100 slipped 0.51pc, the DAX dropped 0.79pc, the CAC fell 0.61pc.
16.34 Christine Lagarde has spoken, saying that a Greek exit from the euro would be "messy" and have consequences for growth. But she didn't rule it out as a possibility, saying: "we have to be technically prepared for anything". There was also a hint about a possible lowering of interest rates, as she claimed that the ECB had "room for manoeuvre".
16.09 So, Greece will hold a fresh round of elections in June. What do you think the outcome will be? Vote in our poll:
15.50 François Hollande is now on his way to Berlin to meet Angela Merkel, after meeting reporters at the Hotel de Ville in Paris.
Devorah Lautner reports that he is running 40 minutes late for his flight. One of the perks of being President, presumably, is that it will wait for him....
15.45 Greek political leaders are already back on the campaign trail after talks to salvage a coalition from indecisive elections two weekends ago collapsed earlier thie afternoon.
Antonis Samaras, leader of the right-leaning New Democracy party, has called for Greeks to vote to secure the country's position as part of the euro.
He said in a TV interview:
Our future is under threat. We will not lay down our arms. Europe understands now that one-way austerity destroys growth.
Greece needs to change the bailout terms and make an effort to return to growth while staying in the EU, he said.
15.20 Moving away from Greece for a moment, Devorah Lauter has an update from Paris on François Hollande's presidency. He has made two key appointments, she writes.
For the positions of prime minister, and general secretary to the Élysée, the self-described, “normal” president appears to have chosen similarly “normal,” male candidates who are reputedly easy to work with. The remaining government appointments will be officially announced Wednesday.
Jean-Marc Ayrault, 62, is anticipated as the next prime minister of France after serving on the French parliament for 15 years. He is a major figure in the Socialist Party, and a so-called “elephant,” a term reserved for veteran party members. Mr Ayrault’s fluency in German is also viewed as a potential asset for German-French negotiations.
Pierre-René Lemas, 61, is expected to become the new general secretary at the Élysée, a position likened to vice president. Another old friend and fellow alumni from the prestigious ENA school (Ecole nationale d’administration), which Mr Hollande attended, Mr Lemas is the cabinet director for the Socialist senator, Jean-Pierre Bel. However, he is better known as the former prefect to Corsica, where he earned a reputation for leading reforms in decentralization.
15.05 Greek economist Yiannis Mouzakis gives us a clue about what the next few weeks hold for the country:
14.45 Here's some more detail on the politics of Greece's new elections:
A spokesman for President Karolos Papoulias announced this afternoon that the process of seeking a compromise had been declared a failure and a new vote must be held.
The president didn't give a date for a new poll, but electoral rules indicate it would not be until mid June.
Evangelos Venizelos, leader of the Socialist PASOK party which wanted to be part of a coaltion and supports the EU-IMF bailout and austerity measures, said:
For God's sake, let's move towards something better and not something worse. Our motherland can find its way, we will fight for it to find its way.
However recent polls show the left-wing Syriza party, which came second in the elections on May 6 and wants to abandon the austerity programme of wage and spending cuts altogether, would win an election if it was held now.
That would throw the country's bailout into disarray because European leaders have said any more bailout funds will be cut off if the austerity programme is ignored.
14.35 US markets are open for the day and trading slightly higher - clearly they are more sanguine about Greek elections than traders on this side of the Atlantic.
The Dow Jones is up 0.2pc at 12,715 points, while the S&P 500 traded flat.
14.25 In Athens, stock markets are falling too, as far as their lowest level since 1990, and now trading down 4.6pc.
14.20 European stock markets are all now in retreat and Italian bond yields briefly rose above 6pc, where Spain's are already trading.
The FTSE 100 is down 0.6pc to 5,433.8 points, the CAC is off 1.1pc and the DAX lost 1.4pc. The IBEX fell 1.6pc in Spain and Italy's FTSE MIB slipped 1.8pc.
The yield on Italian 10-year bonds jumped to 6.011pc before falling back to trade at 5.97pc, while Spain's widened to 6.34pc.
14.10 The news that Greece will have to hold a fresh round of election has sent the euro sliding against the dollar as the graph below shows:
14.05 BREAKING ...
Greece will be holding a new round of elections, having failed to agree on a coalition government after the inconclusive elections of 9 days ago.
14.00 JPMorgan faces the music this afternoon at its annual shareholders meeting down in Tampa, Florida.
Many investors will have cast their votes in favour of the board and pay report before last week's revelation that the bank had racked up trading losses of more than $2bn (£1.25bn).
However the question and answer session is sure to be interesting - Richard Blackden, our US business editor, is reporting from Florida. The meeting is due to start at 3.30pm London time.
13.40 US retail sales figures came in rather weakly for April.
Sales were up just 0.1pc, after clothing and building materials sales declined. March figures were also revised to show a gain of 0.7pc, down from 0.8pc in the previous estimate.
12.30 An appropriate metaphor for the ecnomic conditions ahead? François Hollande has been sworn in as president of France amid torrential rain. Surely there is a presidential unmbrella he could have borrowed?
12.20 François Hollande has made little attempt to gild his predecessor's reputation at this morning's presidential handover ceremony in Paris.
Devorah Lauter reports:
Francois Hollande was sworn in as president in a sober ceremony, as intended, this morning.
Personal guests were kept to a minimum, with the notable absence of Ségolène Royal, Mr Hollande’s former partner and the Socialist Party’s 2007 presidential candidate. Valérie Trieweiler, Mr Hollande’s current girlfriend, was at his side in a black, low-cut dress with sheer sleeves and high-heeled gray pumps.
Mazarine Pingeot, the daughter of former French president, Francois Mitterrand and his mistress, Anne Pingeot, whose existence was a long-kept secret, was also present at the inauguration ceremony today.
“I am very moved to come back here under different circumstances,” she said following the ceremony. “It’s very strange, because I came here in different ways that were not necessarily official,” she said. “It’s like a loop that’s come full circle,” she added.
Other guests included Socialist Party veterans, former prime ministers and French Nobel Prize winners. In his first speech after the official swearing in, Mr Hollande said that under his watch, “power would be exercised with…scrupulous behavioural sobriety,” a thinly veiled pique at Nicolas Sarkozy, often criticized for a volatile temperament.
However, Mr Hollande did not refrain from a direct strike at the out-going president. As he concluded his speech, Mr Hollande thanked previous French presidents for their work and contributions to the country, but when he reached Sarkozy, he did not mention a single one of the outgoing president’s positive accomplishments. “Nicolas Sarkozy, to whom I address my wishes for a new life that opens before him,” was all that Mr Hollande said about his predecessor.
11.50 Greece has confirmed it will repay the full €450m bond which matures today (see 08.35 post), after it failed to reach any deal on a reduction with investors who ehdl out against the debt restructuring which went on earlier this year.
A government source told AFP the repayment was intended to avoid any dispute, at a time when Greece is still trying to form a government after voters widely reject the harsh austerity terms of the EU-IMF debt deal in an election 9 days ago.
Private creditors in effect lost 70pc of their investment in a debt writedown agreed earlier this year as part of Greece's bailout agreement with the IMF and EU. Nearly 97pc of the total debt was eventually covered, leaving some €6.5bn outstanding, including the €450m bond which matured today.
11.15 Henry Samuel, our man in Paris, has been listening to new French president François Hollande, who has mentioned his plan to agree a new fiscal pact among eurozone countries, overthrowing the one agreed earlier this year.
The president said:
Today many peoples, starting with those in Europe, are awaiting and watching us. To overcome the crisis hitting it, Europe needs projects, it needs solidarity, it needs growth.
To our partners I will propose a new pact that will combine the necessary reduction of public debt with indispensible stimulation of the economy.
11.00 Britain's trade deficit narrowed slightly in March - it inched down to to £8.56bn from £8.59bn in February. Economists had forecast a gap of £8.4bn.
Both overall goods exports and importsvalues reached a record high. The increase in exports of cars and and pharmaceuticals was balanced by imports of oil.
10.40 For those of you as interested as me in how Nicolas Sarkozy managed to look taller than François Hollande at today's presidential handing-over, FT Alphaville has kindly supllied the two men's heights - so it must have been the shoes...
10.35 Today's cartoon from The Daily Telegraph on the eurozone crisis is another beaut:
10.10 European shares are showing a bit of a mixed picture after the growth figures:
The FTSE 100 is up 0.1pc at 5,470.6, while the CAC rose 0.4pc in Paris, but the German DAX is flat.
10.05 More from the eurozone - the currency bloc may have avoided a recession overall, but there is a huge split between the muscular growth in Germany and the depressed growth in Italy and Greece.
Mads Koefoed, a senior economist at Saxo Bank, said:
Germany is leading the bloc, but this doesn't mean we will have a strong rebound, austerity is not going away and southern European economies are really struggling. We are looking at stagnation to very mild growth in the year to come.
10.00 BREAKING ...
The eurozone has narrowly avoided going back into recession, with the region's economy showing 0pc growth in the first quarter. The region's economic output went backwards in the last quarter of 2011, shrinking 0.3pc.
09.50 Apologies we're a bit slow getting this one to you - Italy's GDP figures are also out this morning, and show the economy shrank more than expected in the first quarter.
The economy contracted 0.8pc in the first three months of the year, more than the 0.7pc forecast and worse than the 0.7pc decline in the previous quarter.
09.40 The news we all need to know - how Nicolas Sarkozy managed to appear taller than François Hollande as he handed over the keys to the Elysee Palace this morning:
09.35 Following the eurozone finance ministers' meeting last night, the full EU group is getting together this morning.
Bruno Waterfield says our Chancellor is going to give some ground on the Basel III banking changes, which the UK has opposed so far.
Conveniently sheltering behind a row over who’s to blame for eurozone “uncertainty”, Osborne is expected to surrender sovereignty over how Britain imposes tough capital rules on its banks
Current draft of socalled CRD4 still includes a limit on how high national authorities can raise capital requirements on banks without EU permission, and provisions that soften “Basel III” definitions of what counts as capital
Chancellor will insist that nothing in EU legislation stops him implementing Vickers banking reforms and will highlight progress on bank liquidity and leverage.
Here is the Chancellor speaking in Brussels:
09.25 Henry Samuel sends an update from François Hollande's swearing-in ceremony in Paris:
François Hollande has arrived at the Elysée Palace to be sworn in, walking up the red carpet on its steps. The handshake with Nicolas Sarkozy, the outgoing conservative was "without effusion or warmth and very brief," TV commentators said.
He certainly has a hugely busy day ahead both in national and European politics. Mr Hollande will later try to "find a compromise" with Angela Merkel over the German-led focus on austerity as the solution to Europe's economic crisis.
Mr Hollande will travel to Berlin with the backing of the French electorate to renegotiate the fiscal pact, but he's already had some bad news: official figures released this morning show the French economy showed no growth in the first quarter of 2012. Growth in the final quarter of 2011 was also revised down to 0.1% from 0.2%. Germany's economy, meanwhile, grew by a stronger than expected 0.5% in the first three months of the year.
Difficult for a French president to stand as tall as his German counterpart given its waning economic clout.
09.00 Shares across Europe are trading higher this morning:
The FTSE 100 is up 0.4pc to 5,489.4 points, the CAC added 0.9pc in Paris and the German DAX rose to 0.5pc.
08.35 BREAKING ...
No default from Greece just yet - the country will pay holders of the €430m bond which matures today, a government official has told Reuters. "The bond will be paid," the official said.
As mentioned in the 07.15 post, the holders of the debt are hedge funds which refused to participate in the debt restructuring earlier this year.
08.15 Jeremy Warner has taken issue with the Chancellor's complaint that Angela Merkel and others are damaging the chances of a recovery in UK by spooking markets with talk of a eurozone exit:
08.05 London markets are open for the day and trading higher:
The FTSE 100 was up 0.4pc to 5,486.8 points shortly after trading started.
07.50 Economists have welcomed Germany's strong GDP figures this morning, but warned such a pace will be unsustainable if conditions in the rest of the eurozone don't improve:
Joerg Kraemer, an economist at Commerzbank, said:
This is a very strong comeback. The decline in the fourth quarter was not the start of a recession but just an economic dip.
Germany is faring better than the rest of the eurozone. But I do not believe that it will continue at this speed.
07.35 Looking ahead to European markets opening, the futures markets are betting shares will rise, recovering slightly from yesterday's sharp falls:
The FTSE 100 is set to open flat at 5,450 points, the CAC is expected to rise 0.4pc and the DAX to add 0.2pc.
07.25 As well as meeting, meeting, meetings, the big news this morning is growth figures from the eurozone.
Germany has turned in a very respectable set of figures - its economy grew by 0.5pc in the first quarter of 2012, beating forecasts for a 0.2pc increase, on the back of strong exports. It also meant Germany avoided going back into recession, following a 0.2pc contraction in the final quarter of 2011.
France on the other hand, has an economy which has stalled altogether - growth was 0pc in the first quarter, and the rate of growth for the final quarter of 2011 was revised down to 0.1pc from 0.2pc.
At least the two big powerhouse economies of the eurozone have avoided going back into recession, unlike the UK...
07.20 Jeremy Warner says a Greek exit from the single currency could be the "fatal blunder" that crowns the list of failures by eurozone leaders to contain the crisis.
Mistakenly, eurozone leaders have convinced themselves that it won't much matter if Greece leaves, and indeed that it might even help resolve the wider crisis to get rid of this persistent thorn in the flesh.
Bring it on, they mutter callously; it will be a lot worse for them than for us. On one level, this is just bravado. It's an attempt to put as nonchalant a face as possible on the now apparently inevitable. But they also seem to believe in their validity of their own analysis – that they have indeed used the past two years well, and are now fully prepared for a Greek exit.
Believe it if you will. The ineptitude to date of the eurozone's crisis response strongly suggests a different conclusion – both that the likely contagion from an exit has been hugely underestimated, and that by prompting a wider breakup, thereby tipping Europe into depression, it may end up as bad for everyone else as it is for Greece.
The threat comes from market contagion to other eurozone countries worst hit by the debt crisis. To Germany, Greece has always been a special case, a nation which cheated its way into the euro, whose citizens are lazy and won't pay their taxes, and is in any case basically ungovernable. There is a very different attitude to Spain and Italy. Germany's determination to make the rest of the eurozone work should not be underestimated.
The trouble is that once one has left, and the principle has been established that it is indeed possible to leave the euro, it's going to be tough to impossible to contain the crippling capital flight which is certain to set in elsewhere. Greece is just the canary in the mineshaft, an outrider for the much wider problem of imbalances and divergent competitiveness.
07.15 Meanwhile Greek politicians are making a final effort to form a coalition government, after last week's inconclusive elections - a new poll may have to be called if they can't agree. The uncertainty dragged down share prices and pushed up bond yields across Europe.
Louise Armitstead reports:
Politicians in Athens were urged last night to make the “right decision” and avert the “terrible consequences” of their deadlock, as fears of a Greek exit from the euro gripped financial markets.
Germany’s finance minister, Wolfgang Schaeuble, said Europe can “only hope” for political agreement in Athens as European stock markets tumbled and the euro fell to its lowest level against the pound for three and a half years.
Highlighting the threat facing the eurozone, credit rating agency Moody’s last night downgraded its view of 26 Italian banks which are heavily exposed to government bonds.
While politicians wrangled, traders fretted over whether Greece would default on a €430m (£344m) bond due today – the first real test of its resolve over its financial commitments.
Alexis Tsipras, leader of Greece’s second biggest political party Syriza, said: “There’s a bond to pay back tomorrow and the government doesn’t know if they’ll pay it or not.”
The bond is a rump of old Greek sovereign debt that is held by hedge funds that refused to participate in €250bn of restructuring in March.
07.10 Last night's eurozone finance ministers meeting was fairly uneventful, with the ministers claiming they didn't discuss a Greek exit from the single currency - making them the only people in Brussels yesterday NOT discussing that question...
However ahead of today's EU finance ministers meeting (aka Ecofin) George Osborne has expressed frustration with Angela Merkel's comments about a possible Greek departure from the euro (aka Grexit - keep up at the back!), which helped to send shares down across Europe yesterday.
The Telegaph's Robert Winnett, David Blair and Bruno Waterfield report:
Speaking after he arrived in Brussels for meetings with other European finance ministers about the worsening eurozone crisis, Mr Osborne implied that the German chancellor was destabilising the global economy.
“The eurozone crisis is very serious and it’s having a real impact on economic growth across the European continent, including in Britain, and it’s the uncertainty that’s causing the damage,” said Mr Osborne, the Chancellor.
“Of course countries have got to make difficult decisions about their public finances. We know that in Britain. But it’s the open speculation from some members of the eurozone about the future of some countries in the eurozone which I think is doing real damage across the whole European economy.”
07.05 Today is all about meetings - France's new president Francois Hollande is due to be sworn in, after which he will race off to meet German Chancellor Angela Merkel for the first time.
And finance ministers from across the EU will meet today, following the gathering of eurozone finance minsters last night.
Henry Samuel in Paris has more on the key first Merkel-Hollande meeting:
Mr Hollande's aides insist the inauguration will be a “sobre” ceremony with little of the pomp and family glitz so prevalent at Mr Sarkozy’s inauguration five years ago.
But the victory lap ends there, as he must immediately leave for a bruising clash with Ms Merkel over crisis in the eurozone this evening – a showdown which, as his campaign manager, Pierre Moscovici put it, could set his presidency on a trajectory of “success or failure”.
Mr Hollande has championed the idea of renegotiating the fiscal pact that enshrines budgetary discipline in the eurozone to include a growth chapter. Mrs Merkel insists the pact, signed by 25 of the 27 EU countries and already ratified in some, must stay as it is.
The Chancellor has promised to welcome him with “open arms” and that the visit was just a "getting-to-know-you" gathering, but Benoît Hamon, the Socialist Party spokesman set the stage for a clash by saying on Sunday: “We didn't vote for an EU president called Mrs Merkel who makes sovereign decisions for the rest of us.”
07.00 Good morning and welcome back to our live coverage of the European debt crisis.
Debt crisis live: archive
