Hopes Raised Of EU Deal Over Greek Bailout

The European Commission chief has said he is “convinced” an agreement can be reached this week aimed at preventing Greece defaulting on its debts.

Hopes Raised Of EU Deal Over

Jean-Claude Juncker was speaking after an emergency summit of European leaders in Brussels discussing Athens’ new budget proposals to raise billions more euros.

The Greece plan includes:

:: Streamlining the complex VAT system by getting rid of some exemptions, including on the country’s islands. This would make goods 30% more expensive for tourists on the islands as there is currently a 30% discount. The plan could raise 1.36bn euros by next year.

:: Early retirement would be restricted, potentially raising 300m euros

:: Pension contributions would be increased by 3.9%, raising a further 800m euros and there would be a special one-off tax for profitable businesses

:: Changes to corporation tax, increasing tax paid by the rich, expected to raise 815m euros

Earlier, talks between Greece and the eurogroup of finance ministers on how to prevent the nation crashing out of the single currency ended without a bailout deal.

The ministers will meet again on Wednesday and there is optimism that an agreement can be reached between Greece and EU creditors, with the French President Francois Hollande saying the EU was “moving towards a deal”.

Greece has been kept afloat by two bailouts totalling 240bn euros (£172bn), but the programme is due to expire at the end of June, on the same day the country owes 1.6bn euros (£1.15bn) to the International Monetary Fund (IMF).

European Council President Donald Tusk said “all parties are committed to finding a solution” and the proposals were “positive” while European Commission President Mr Juncker described them as “a major step”.

Mr Juncker added: “I am convinced that we will come to a final agreement in the course of this week” after a five-month stand-off.

But German Chancellor Angela Merkel, whose country is Greece’s biggest creditor, was more cautious.

She said of a final deal: “I can’t give any guarantee that that will happen. There’s still a lot of work to be done.”

And Mr Hollande also cautioned: “There is still work to be done… every effort must be made so that when eurozone finance ministers meet on Wednesday, a solution is in sight.”

It is hoped a plan for a deal can be presented to EU leaders at a summit the following day.

The European Commissioner responsible for the euro told Sky News that Greece had presented a “serious and comprehensive proposal” for the first time.

Valdis Dombrovskis said that as a result, Europe was in a “better situation” now than it was last week.

Mr Dombrovskis told XulNews that the two sides had “converged” on “primary surplus targets” but he admitted further work was needed, though it was a “good basis for negotiations”.

European stock markets had surged amid hope of an agreement, with the Athens exchange soaring 7.1%, but the mood grew more sombre as the day went on.

Arriving for the crunch talks in Brussels, Greece’s prime minister Alexis Tsipras said his country needed a “viable” solution which would allow it to return to economic growth.

Even if an agreement is eventually reached on a new package, Mr Tsipras would still have to sell any concessions to his own party and an austerity-weary electorate.

Some on the left of the Syriza coalition have indicated they would vote against any package which increased the hardship of the Greek people.That could trigger fresh elections and further uncertainty, five years after the debt crisis began.

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