By Peter Spence, Economics Correspondent 08 June 2015
Angela Merkel and Barack Obama have urged Greece and its creditors to agree a deal as debt standoff becomes an international priority
Angela Merkel, the German chancellor, warned that time is running out for Greece Photo: Rex Features
Greek stocks have taken another hit as the embattled country and its creditors have failed to make progress, despite pressure from world leaders to strike a deal.
Athens-listed equities fell by a further 2.7pc on Monday, as the Greek economy moved closer to debt obligations it appeared unable or unwilling to meet.
The tumble followed a 5pc fall on the Athens Stock Exchange last Friday, its largest since January.
The slide came before Yanis Varoufakis, the Greek finance minister, said that the country's creditors were demanding austerity so severe that Greece would be unable to grow.
Speaking in Berlin after stock market trading hours, Mr Varoufakis said that the primary surpluses Greece was instructed to produce would require him to reach "into the guts, into the heart, into the substance of the private sector and extract so much out of it, that the private sector can not produce the growth".
"One reason that we haven’t reached an agreement, privately we’re being told that there’s a logic to what we’re saying, but politically, it’s very hard for the institutions to come out and admit it," he said.
Attendees of the G7 summit made clear on Monday that resolving the Greek standoff was now an international priority. Speaking at the meeting in Germany, Angela Merkel, the country’s chancellor, said: “There’s not much time left. We have to work very hard on this.”
“All of us [G7 leaders] were of the opinion that a whole lot of work still lies ahead,” she said, adding that “we want to make every possible effort, but we aren’t there yet”.
Having bundled together the payments it is due to make to the International Monetary Fund (IMF) this month, Greece must now scrape together the €1.6bn (£1.2bn) it owes by June 30.
Barack Obama, the US President (Photo: Getty)
Ms Merkel’s comments came as Barack Obama, the US President, said that Greece would have to make “tough decisions” which would be “good for the long term”.
They were echoed by Bank of America Merrill Lynch (BAML), who said that “time is very short”. If it can not find the funds and some alternative deal can not be made, then Greece may be forced out of the Eurozone entirely.
Analysts at the Wall Street bank said that Greece owed €10bn to the IMF and European Central Bank over the summer. “If the negotiations do not even start converging towards a deal this week, we may see negative scenarios unfolding even before June 30,” they said.
Investors appeared unconvinced that progress is being made, despite intonations from Mr Varoufakis that the mood had improved.
In an interview published by German daily newspaper Der Tagesspiegel Mr Varoufakis blasted Greece’s creditors, stating that the kind of proposals they had offered would only be put forward “if you actually don’t want to reach an agreement at all”.
Yet later on Monday, Mr Varoufakis said that discussions with his German counterpart Wolfgang Schaeuble had been held in an “extremely friendly manner” and that they “will be very helpful to find a final solution”.
Mr Varoufakis said: “It is a duty for us politicians to try to find an agreement. That is absolutely essential for the European Union.”