18.35 The latest cost-cutting plan in Spain is to deny medical care to its estimated 500,000 illegal migrants. Those without residency papers have been told to rely on charity to meet their health care needs, including antiviral drugs and cancer treatments, writes Fiona Govan. Spain's regions have been ordered to roll out the plan in a bid to reduce the country's budget deficit from 8.5pc of GDP in 2011 to 5.3pc this year, as demanded by Brussels. Gaspar Llamazares, a United Left deputy in Congress, said: "From a humanitarian point of view, this is a repugnant measure." 18.24 The main austerity commitments that were agreed prior to Greece's bailout are non-negotiable, says an anonymous senior EU official speaking to AFP: The large and small print of the memorandum of understanding are as they are and they have been negotiated. I would not use the words that every comma is non-negotiable but the MOU as such is non-negotiable. 17.51 The EU has said it will keep Greece funded until it agrees on a new government. A eurozone official told Reuters: We will provide enough funds for Greece to stay afloat for as long as the political decision is clarified. There is no use letting them default in the middle of things. Which gives economist Megan Greene an idea... 17.24 Kouvelis, on the right in the picture below, has said that the proposed coalition would keep the country in the euro but "disengage it from the international bailout," according to Reuters. I propose the formation of an ecumenical government that will respect the people's mandate. 17.10 Good news coming from Greece: it may not take a second election to create a working government after all. The leader of the Democratic Left Party, Fotis Kouvelis, has suggested that a "coalition of all political powers" is formed. Evangelos Venizelos, leader of PASOK, which currently has the mandate to form a new government, has said that a meeting with Kouvelis was a "good omen" for a possible coalition. This proposed coalition would rule until 2014. 16.49 European markets have closed, bouncing slightly after losses earlier in the week on the hope that Evangelos Venizelos can form a new government and bring some stability to Greece. One anonymous trader, speaking to Reuters, said: There is speculation that the Greeks have an agreement on a coalition government. Besides, there are levels at which you have to buy the banks, even if just for (short-term) trading. The FTSE 100 gained 0.25pc, the DAX climbed 0.66pc, the CAC was up 0.37pc and Spain's IBEX soared 3.42pc. 16.35 A hardy perennial, this, but it's interesting to see how the poll results change over time. What is Greece's future in the eurozone? 15.45 An EU official has been making encouraging noises about Greece to Reuters, ahead of a meeting of eurozone finance minsters on May 14 in Brussels. I see no appetite for exit on the part of Greece or on the part of the 16 others. There is a lot of speculation on the issue given the pronouncements of the leader of the second largest party in the elections. The unnamed official also said it could be possible to adjust Greece's bail-out terms "at the outer margins" but that the main Memorandum of Understanding is "non-negotiable." 15.35 And here's one German who agrees with Ambrose - Axel Weber, former head of the Bundesbank and now chairman of Swiss bank UBS, told an Economist conference in London that the root problems of the eurozone have not yet been tackled. A hard default by Greece, ie. one not agreed to by creditors, is "not off the table," and Spain's banks and economy carry a risk of contagion for Italy and other eurozone nations. Any renewed escalation of the crisis is also likely to come home to roost even in Germany. The ECB's cheap short-term loans "only bought time. We seem to have lost a year in terms of dealing with the underlying problems," he added. 14.55 Ambrose Evans-Pritchard however thinks Germany is playing a nuclear game of brinkmanship with Greece. Greeks have yet to conclude that the euro itself is the cause of their catastrophe - though they are getting there. By the euro, I mean the whole structure of monetary union, made worse under current policy settings (incompetence). There can be no possible escape from this lamentable state of affairs at this late stage until they return to the drachma. The mechanism of an internal devaluation is to push unemployment to excruciating levels until it breaks the back of labour resistance, opening the way for pay cuts. In fact, it tends to break societies before this theoretical outcome is achieved - if it can be achieved in a context of high debt loads, the Irving Fisher effect. If Greece were to convert its public debt into drachma, it would be in a perfectly viable position. Its private-sector debt is one of the lowest in the OECD. The devaluation could be held at around 40pc or whatever is appropriate to restore labour competitiveness. My guess is that tourism would recover within a few months, and then boom, provided there was a credible government. The Greek food industry would come back to life. So would light manufacturing. Those in the Bundestag, the ECB, and the EU elites now playing nuclear brinkmanship with Greece - ie, threatening expulsion unless Greeks vote again in June, and get it right this time - have misunderstood the predicament they are in. Shakespeare had a term for this: hoisted by their own petard. The worst possible way to do end this misadventure is to light the fuse in Greece and set off a chain-reaction of uncontrolled EMU exits and sovereign defaults. Unfortunately, the colossal misjudgement now being made in Berlin and Frankfurt makes this unhappy ending more likely by the day. 14.45 German finance minister Wolfgang Schäuble has been giving the hard word to Greece's leaders too - he said the country will only be helped if it helps itself. Greece can rely on the solidarity of Europe, but if Greece does not help itself, there is nothing to be done. There is a clear determination in the European Union, the eurozone and the International Monetary Fund to do whatever is necessary to help Greece. But whether Greece is ready to do what is necessary - only the Greek people can decide. 14.25 Evangelos Venizelos has now become the third Greek political party leader to try and form a government - after Alexis Tsipras of the Leftist Coalition and Antonis Samaras of New Democracy had to throw in the towel earlier this week. Mr Venizelos has acknowledged he has a slim chance of doing what the others failed to do but he's going to do his very best... As the veteran of many, many, many, many late night eurozone summits and Greek parliamentary votes, we know he's got stamina. 14.15 The European debt crisis may have dented demand for Chinese goods (see 08.07), but it's a different story in America, where sales to Europe have hit an all-time high. US exports increased by 2.9pc in March to $186.8bn, according to the US Commerce Department. However, imports also rose 5.2pc to a record $238.6bn, pushing up the country's trade deficit to $51.8bn, from $45.4bn in February. 13.37 The number of Americans applying for jobless benefits for the first time edged down to 367,000 last week, from 368,000 a week earlier. The less volatile four-week moving average also fell by 5,250, to 379,000, according to the US Labor Department. Commenting on the data, Wayne Kaufman at John Thomas Financial, said: This was as expected, and there was no big revision. I think what's going to happen is that any effects from the good weather, which pulled forward some of the economic data from the spring and summer, that effect is going to gradually move out. We're in a slow-growth environment. Not a doom and gloom environment, but not a good one either. 13.12 The Composite Leading Indicators (CLIs) also highlighted a split between France and Germany. The OECD said: Compared to last month's assessment, the CLIs for Japan and the United States show stronger signs of improvements in economic activity, pointing towards an expansion. In the Euro area, the CLIs for France and Italy continue to point to sluggish economic activity below long term trend. The CLIs for Germany and most other Euro area economies show slightly more positive signals. Although economic activity in Germany and France is below the long-term trend in both countries, the OECD said that Germany was showing "slightly more positive signals" (Source: OECD) 13.06 The British economy is now at a firm "turning point," according to the Organisation for Economic Co-operation and Development (OECD). The OECD said that the British economy showed "stronger positive signals compared to last month," when it said that the UK was at a "potential turning point." Turning points of CLIs tend to precede turning points in economic activity relative to long-term trend by approximately six months. Shaded triangles mark confirmed turning-points of the CLI. Blank triangles mark provisional turning-points that may be reversed (Source: OECD) 12.43 First Ladbrokes (see 10.59), now William Hill: 12.18 The Bank of England will release its latest inflation and growth projections next Wednesday. We'll also find out how many of the nine members of the MPC voted for more QE when the minutes are released in two weeks. Last month, arch-dove Adam Posen surprised the markets by dropping his call for an extra £25bn increase, leaving David Miles as the sole MPC member pushing for more asset purchases. 12.05 Commenting on the Monetary Policy Committee's (MPC's) decision, Vicky Redwood at Capital Economics, said: Today's decision by the Monetary Policy Committee (MPC) to pause its programme of asset purchases shows that the Committee is putting greater weight on the recent stickiness of inflation than the poor activity news. But if we are right in expecting inflation to fall much further and the recent soft patch in the economy to continue, a resumption of quantitative easing (QE) is likely later this year. While Ian McCafferty, the Confederation of British Industry's (CBI) chief economic adviser, said: The combination of sluggish activity and sticky inflation put the MPC in a difficult position, and this decision is likely to have been a close call. But we expect the recovery to be on a firmer footing in the second half of the year, as inflation eases and the global economy strengthens. 12.01 The Bank of England has held interest rates at a record low of 0.5pc. There will also be no more money printing - for now. The Bank voted to keep its quantitative easing (QE) programme on hold at £325bn. The Bank completed its latest, £50bn cash injection into Britain's ailing economy at the beginning of the month. 11.53 Earlier today, Mr Venizelos said that Greeks were "bothered by the truth," but reiterated his proposal for a government comprised of pro-European forces. Alexis Tsipras greets Evangelos Venizelos in Athens on Wednesday (Phot: EPA) 11.39 Greece's former finance minister Evangelos Venizelos hasn't received a mandate to form a goverment yet, but leaders are already refusing to meet with him. Panos Kammenos, who leads the Independent Greeks party, told Antenna TV that any meeting would be irrelevant. the exploratory mandates should have been finished two days ago. The only thing that has a meaning now is the meeting under the President Karolos Papoulias. Mr Kammenos also wants to tear up Greece's bail-out agreement. 11.27 Klaus Regling, the chief executive of the European Financial Stability Facility (EFSF) has said that Greece will not receive any more financial aid after June until the "troika" team (EU, IMF and ECB) of debt inspectors have concluded their latest review. Speaking in Vienna, he said: Under the existing first tranche, which was already approved some time ago, there's another €1bn available for debt service in June, but then there has to be a new Troika visit and an agreement on what happens on the second half of the year and next year, so there will be no further disbursement before there is an agreement with the Troika. Klaus Regling (Photo: Bloomberg) 11.09 One person not betting on a Greek exit (yet) is European Central Bank (ECB) member Ewald Nowotny, who told reporters in Vienna that any talk about an exit was "premature." What we have to discuss now is how to solve this situation we see now. The key for solving this lies with the Greek government and the political system. We have to see how this is developing but we don't have an infinite amount of time. Time flies. 10.59 Ladbrokes has now suspended bets on a Greek euro exit: 10.45 More bad news. Industrial production in Greece slumped by 8.5pc on an annual basis in March, EL.STAT said, as the country's manufacturing sector contracted by 8.8pc. Platon Monokroussos at EFG Eurobank said the data pointed to a "significantly weak" Q1 GDP reading. Greece releases its quarterly growth (?) estimates next Tuesday, when Germany will also release its figures. 10.28 The dire data cement Greece's position as the eurozone's new youth unemployment blackspot. Earlier this month, Eurostat, the EU's statistics office said that youth unemployment in Greece had ticked up to 51.2pc in March, and 51.1pc in Spain. Spain still has the highest unemployment rate in the industrialised world, at 24.4pc. 10.12 Youth employment in Greece has jumped by three percentage points in the space of just one month. The unemployment rate for Greeks aged between 15 and 24 soared to 53.8pc in February, compared with 50.3pc in January, according to the Hellenic Statistical Authority. Greece's unemployment rate ticked up to 21.7pc in February, compared with an adjusted rate of 21.3pc in January (adjusted from 21.8pc). The adjustment meant the total number of people out of work in February fell slightly, to just over one million. 09.51 Commenting on the data, Ross Walker at RBS, said: Most of us were caught out by the weakness in the February data, so some of that is coming back, but it's not going to be enough to get us a GDP revision. The bigger picture is it's essentially in line with what we had in the preliminary GDP estimate, but the underlying picture looks a bit better because of the stronger manufacturing number. 09.38 The UK's manufacturing sector grew more strongly than expected in March. Output grew by 0.9pc in March, reversing February's shock 1.1pc fall, according to the Office for National Statistics. The growth was also stronger than the 0.5pc predicted by economists in a Bloomberg poll. Manufacturing of electrical equipment grew by 12.1pc in March, offsetting a fall in food, beverages and tobacco, the ONS said. However, the wider measure of industrial production fell by 0.3pc month-on-month, following steep declines in mining and quarrying. 09.22 Evangelos Venizelos, leader of Greece's PASOK party, is expected to receive a mandate to form a government at around 12pm UK time. His party has 41 seats in parliament. 09.09 Borrowing costs across the periphery have fallen this morning. Yields on 10-year Spanish bonds are back below 6pc, at 5.976pc, while Italian bond yields are currently trading at 5.562pc. UK 10-year borrowing costs are just above yesterday's all-time lows, at 1.903pc. 09.02 Stock markets have been trading for just over an hour. The FTSE 100 in London is flat at 5,536.83, while Frankfurt's DAX is up by 0.6pc. After falling close to a 10-year low yesterday, Spain's IBEX 35 is up by 1.6pc, at 6,923.10, while the FTSE Mib in Milan has ticked up by 1.1pc, to 13,924.77. 08.59 Nouriel Roubini and Megan Greene explore Spain's problems in an op-ed in today's Financial Times (£): Spain's credit boom peaked in 2008 when the supply of cheap, external finance began to fall sharply. Four years later, Spanish banks" asset quality continues to plummet. The sector will require €100bn-€250bn in recapitalisation later this year to maintain a 9 per cent core tier one capital ratio, the minimum stipulated by the European Banking Authority. In the meantime, there are concerns about the capacity and appetite of Spanish banks to support the sovereign, particularly amid rating downgrades and deposit withdrawals. 08.48 Following last night's Bankia bail-out, the BBC's business editor Robert Peston asks if Spain will suffer an Irish-style bust: Based on the recently published results of Spain's seven publicly listed banks, the investment bank Morgan Stanley calculates that lending in Spain is contracting at a damaging annual rate of around 8%. A credit crunch is exacerbating Spain's recession. If all this sounds familiar, that is because it is - to a great extent - a re-run of the collapse of Ireland's banks. Just like Spain, Ireland for months insisted it had the resources to sort out its banks on its own. But in the autumn of 2010, it capitulated in the face of horrific market reality, and went cap in hand to the eurozone and IMF. The other lesson of Ireland, many would say, is that the longer a government fails to face up to the true weakness of its banks, the bigger the eventual costs of the remedy. 08.31 There is no "magic potion" to solve Europe's debt crisis, German Chancellor Angela Merkel said this morning. Mrs Merkel insisted that the only way to control the eurozone's "horrendous" debt problem was to cut debt and boost competitiveness through structural reform. She told legislators in Berlin: To say this unequivocally: growth through structural reform is sensible, important and necessary. Growth funded by debt will just lead us back to the beginning of the crisis. We can't do that and we won't do that. Angela Merkel addresses deputies on the upcoming G8 and NATO summits at the lower house of parliament on Thursday (Photo: AFP) The Bank of France now expects the economy to stagnate for the first half of the year. "GDP is expected to remain stable in the second quarter of 2012," the Bank said in its monthly survey on industry and services. Its forecasts also suggest "a slight contraction in industrial activity in the coming months."