Globe

Negotiations between Greece and its European Union partners over the country's debt have seen a combative stance adopted by the participants, but there are likely to be more positive discussions going on behind the scenes, according to Chief Investment Officer Haig Bathgate.

There's no incentive to show a united front because the talks are held in the public eye, with each side playing to their own constituency: the new and relatively inexperienced Greek government wants to show voters it's standing firm on cutting back austerity; the EU, led by Germany, doesn't want any agreement with Greece to undermine efforts to reform the economies of other countries, such as Spain.

But that doesn't mean the European project is on course to unwind; the public aspect of EU negotiations gives the impression that impasses in Europe are more difficult to overcome than actually is the case. Behind closed doors, both parties want the Eurozone to hold together and know that Greece is going to have to reform before any new debt package is released.

Haig, speaking on BBC Radio's Good Morning Scotland, also commented on earnings at Prudential and the departure of Chief Executive Officer Tidjane Thiam to Credit Suisse.

GARY ROBERTSON

More efforts are being made to resolve problems with the Greek economy, our business presenter David Henderson is here with more on that.

DAVID HENDERSON

Good morning, Gary. Yes, indeed, lingering doubts about Greece are doing little to help fuel a recovery in Europe. Today their government will open talks with officials from European institutions, the deal on offer is broadly reform of the Greek economy in return for the unlocking of further funding. Well, with that and the rest of the markets news I'm joined now by Haig Bathgate from Turcan Connell, he's in our Edinburgh studio. Good morning to you, Haig.

HAIG BATHGATE, Turcan Connell

Morning, David.

DAVID HENDERSON

And there's been a flurry of activity since the Greek Government came to power, this new Greek Government, lots of talk but from the market's perspective has the action that has followed offered the reassurance that they've been looking for?

HAIG BATHGATE

Yes, I think it's, as always, a difficult thing to be debated, obviously we've got the new Greek Government who are relatively inexperienced and the market is quite jumpy about what is going to happen here. The problem, as we know in the Eurozone, is that everything is debated in on a public stage as well and the political parties have to be seen to be working for the populous that elected them in the first place, so there's not much of an incentive to project a, sort of, united front and therefore you get this almost like a Punch and Judy show between both parties. The realities behind the scenes, there's likely to be more harmony, but it's quite unsettling for the markets.

DAVID HENDERSON

Well, indeed, how much concern is there that the state of Greece reflects the wider state of Europe. I'm thinking, looking at comments from, for example, Neil Woodford - one of the UK's most successful fund managers - yesterday he said that the European concept was fundamentally flawed and it shows the stresses and strains increasing across Europe.

HAIG BATHGATE

Yes, I don't think the concept is flawed, the idea of having a more harmonious and integrated trading block is sound, the problem is how you actually get there, and nobody said it was going to be easy. Obviously you're trying to make everybody behave to a certain set of rules and the authorities are quite concerned that they could set a precedent and there could be a contagion effect, so if they go easy on Greece then it could have a contagion impact on the likes of Italy and Spain and so-on as well. But our view is quite different, we think that the Eurozone will hold together, however Greece will have to implement some reforms before they get the debt package released.

DAVID HENDERSON

Yes, indeed. Let's look elsewhere, some markets news - just in the last few minutes the Prudential have announced...they've brought out their results early, two hours ahead of time, they reported a 14% rise in operating profits but they have announced their Chief Executive is step down, jumping ship to Credit Suisse - what do you make of that?

HAIG BATHGATE

Yes, well, I noticed this had been leaked overnight in the Asian market, so they've obviously been caught on the hop with this slightly, they've had to bring their results and bring this announcement or confirm this announcement early doors. He's obviously played a very significant role to the Prudential, he's been there for a long period of time now. Prudential had been riding high, as you say, had good results, increasing dividend and so-on, so it's likely that the share price will react in a negative fashion, I would imagine, to his departure.

DAVID HENDERSON

Well, we will watch that space. Haig, many thanks for that. Haig Bathgate there from Turcan Connell.

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