Eurozone agrees Greece bail-out

Haggling over figures, financial targets and Greek government belt-tightening pledges went on through the night in a last-ditch attempt to rally markets and put crisis-hit Athens back on the path to economic recovery.

But the deal is based on long-range forecasts of Greek’s best-case-scenario debt reduction chances over the next eight years, with some pundits instantly dismissing the deal as undeliverable.

In return for the latest 130bn euro (£110bn) bail-out and a private creditor debt write-off worth about another 100bn euros (£84bn), the Greek government is pledged to implement fully a severe austerity package of pay, pension and jobs cuts, as well as finding savings of 325m euros (£270m) in this year’s national budget.

The deal nearly came unstuck over a requirement on Athens to get the Greek projected debt level down to around 120 per cent of national wealth by 2020.

Extra hours of financial juggling brought eurozone negotiators close - at least on paper - by massaging the figures to deliver a theoretical 121% GDP level by 2020.

Greece had only offered 129%, which was rejected as inadequate, although nothing like as bad as the current unsustainable 160% of GDP Greece is grappling with.

Pundits predicted short-term rallying of markets followed by a fall-back when the continuing massive scale of the debt mountain Greece has to climb becomes clear.

The Greek economy received a 110bn euro (£91bn) bail out from the EU and IMF in 2010 but it was not enough to lift Greece out of crisis.

Ahead of the overnight talks some critics were warning against “throwing good money after bad”, but the price of letting Greece default and be forced out of the euro currency was seen as a worse option.

Instead the talks concentrated on tying Greece as tightly as possible to austerity measures which will chip away at its debt and deficit levels.

Political parties on all sides were even pressed to promise no easing of the austerity package in forthcoming Greek elections.