Fears over Greece haunt a recovering euro zone
In a reminder the region is still not out of the woods, Dutch finance minister adds his voice to the belief Athens will need a third bailout
The Guardian in London
Dutch Finance Minister Jeroen Dijsselbloem has become the latest politician to concede Greece may need a third bailout, casting a shadow over news that euro-zone companies are reporting their best growth for more than two years.
"The problems in Greece won't be solved in 2014, so something more will have to happen," said Dijsselbloem, who heads the Eurogroup of finance ministers.
He said the form and scale of another rescue would depend on Greece's progress with economic reforms.
His admission echoed that of German Finance Minister Wolfgang Schauble, who told an election campaign event earlier this week that the bailed-out country still needed more aid.
Schauble said he was holding out the prospect of further aid on condition that Greece fulfilled its obligations "and in the expectation that this will be about far smaller sums than to date".
The International Monetary Fund has suggested there is an €11 billion (HK$114 billion) shortfall in the current rescue package for Greece.
The spectre of destabilising negotiations over a new bailout, though they are unlikely to start until after German elections next month, were a reminder that the euro zone is still not out of the woods, despite an upbeat survey suggesting economic recovery in the 17-member bloc is gathering strength.
The monthly purchasing managers' indices, which test the confidence of firms across the 17 member states, showed both manufacturing and services expanding at their fastest pace since mid-2011.
Chris Williamson, chief economist at data provider Markit, which compiles the indices, said: "The euro area's economic recovery gained momentum in August."
Apolline Menut of Barclays said: "Today's readings confirm that recovery is on track and that GDP should continue to grow in the third quarter."
But while Germany scored a Purchasing Managers' Indexes reading of 53.4 - well above the 50 level that signifies expansion, suggesting recovery in the euro zone's largest economy is gathering speed - output in France declined, and at a faster pace than during July, with manufacturing and services output falling. "A big question mark still hangs over France's ability to return to sustained growth," Williamson said.
Across the euro zone as a whole, export sales rose for a second month and new orders for manufactured goods jumped at their fastest pace since May 2011.
But some analysts remain more sceptical about whether the nascent upturn - after an 18-month recession - will last, particularly if the US Federal Reserve's plan to taper its US$85 billion stimulus programme continues to push up government bond yields on the European side of the Atlantic, raising the cost of borrowing.
A research note from City of London consultancy Fathom said: "The fundamental structural problems facing the euro area have not gone away. In addition, the potential spillovers from Fed tapering pose a threat to debt sustainability in the periphery ... we are a long way from calling an end to the euro area crisis."
That Greece's finances remain strained has long been an open secret, but many European politicians have previously avoided discussing an unpopular new bailout.
Schauble's comments were received gratefully by the centre-left opponents of Angela Merkel's government.
Merkel's predecessor, Gerhard Schroeder, suggested at a rally of his opposition Social Democrats that the governing coalition had tried to hide the inevitability of a new Greek bailout and said "Germany will have to pay for a Europe that is not as steady on its legs as we are".
Additional reporting by Associated Press