Europe’s two richest countries, France and Germany, have cast their weight behind their poorest peer, Greece, saying they do not intend to push the near-bankrupt nation out of the euro fold. Neither, they say, do they have a new proposal or plan to keep Greece’s running debt crisis from spiral out of control.

But on Wednesday French President Nikolas Sarkozy and German Chancellor Angela Merkel took a huge leap of faith by telling their embattled Greek counterpart George Papandreou that they expect him deliver on pledges to reboot the Greek economy.

It’s not the first reprimand Mr. Papandreou has faced in recent months, but it will probably be the last.

The threat, including an imminent cut-off of multi-billion loan funds from international lenders, has set fire to dragging Greek feet. Finance ministry officials are now scrambling to push through delayed reforms and make up for more than €2-billion in shortfalls recorded in the 2011 budget alone. “We have to rally together once more in a national effort,” Finance Minister Evangelos Venizelos said earlier this week.

That may prove tricky.

With recession biting deeper into the Greek economy and unemployment soaring — it’s expected to climb to 20 per cent by 2012 — austerity-hit Greeks are balking at added belt-tightening measures like never before.

On Friday, civil groups said they were mounting class-action suits to block a new property tax announced by the government this week in a desperate bid to close the €2-billion budget shortfall. A string of social networking sites and blogs have sprung up in recent days, rallying Greeks not to pay the new tax.

Seven in 10 Greeks already face difficulty paying a rash of tax hikes imposed by the socialist government in the last two years, according to opinion polls published earlier this month.

The new tariff aims to target high-earners. Still, it exempts monasteries, places of worship and charity funds run by the wealthy Greek Church while leaving none of the country’s five million homeowners untouched — not even the handicapped and unemployed, who are traditionally shielded by the state with special exceptions.

Enraging Greeks further are government threats to plunge homeowners into darkness if they fail to pay the tax, which will be charged through landlords’ electricity bills.

“It’s blackmail,” huffed Nikos Fotopoulos, the leader of the country’s most powerful union. “We will not allow the public power corporation to become a means of tax collection for any government.”

The measure signals what analysts are calling a complete collapse and humiliating failure of the country’s ailing tax collection system. It also mirrors the government’s repeated refusal to pursue radical spending cuts in the bloated public sector, a move that would upend decades of cozy ties between the ruling party and its core constituency.

“They are killing the private sector,” says former finance minister Stefanos Manos, who now leads a political action group. “The government should quit and Greece’s international lenders should spurn such disgraceful moves [ the tax levy].”

Perhaps. But until then, Mr. Papandreou — and Greeks altogether — have been given one last chance to stay in the euro.

Report by anthee carassava ATHENS – The Globe and Mail

Uk house prices increased slightly last month, according to a major lender – but estate agents in Northern Ireland said there was no evidence of increasing prices in Northern Ireland.

Elsewhere in the UK, prices were 1.2% higher month-on-month in June with the average home costing £163,049, Halifax said.

Housing economist Martin Ellis said low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to be the main factors behind the recent improvement in price trends.

But Northern Ireland estate agents said the Halifax view did not reflect their experience.

Richard McCulloch, from Stanley Best Estate Agents in Cookstown, said he has noticed a “slight decrease” in house prices.

“We are noticing more sales, but at the lower end of the market,” Mr McCulloch said.

“The Halifax sample size is not large enough to show the entire market.

“There are more buyers out there, but that is linked to prices being at an affordable level.

“We are expecting a slowdown in July and for things to pick up in August.

“We are keeping our fingers crossed for that.”

According to the latest University of Ulster house price survey, the average house price in Northern Ireland in the first quarter of 2011 was £143,918 – down from £240,408 at the peak of the boom in 2007.

Gary Best, from Best Property Services in Newry, said the majority of his sales were for property priced under £120,000.

“House prices at a local level are fairly static,” he said.

“The sales volume has increased from where we were a year or so ago.

“June has been a fairly active month, but July is expected to be sluggish because of the holiday situation.”

Keith Mitchell, from Templeton Robinson in Belfast, said there is uncertainty regarding prices over the next two or three years, but said quarterly results should not put people off buying a home.

The Bank of England is set to give homeowners breathing space today by keeping interest rates on hold at their historic low of 0.5% amid further signs that the UK’s economic recovery is faltering.

Report by Amanda Poole – Belfast Telegraph

Not wanting to be left out, auction specialist Merlin Group – better known for its car auctions – announced its move into residential property earlier this week. It is getting properties from banks and says it already has 40 for its first big auction in the Burlington Hotel in Dublin in early autumn.

Allsop/Space might find it hard today to match the drama and impact of their – and the country’s – first – discounted auction back in April, which saw €14.8 million worth of deals struck in just six hours on vastly discounted properties in prime locations.

This time around it has 87 distressed properties around the country with reserves as low as €40,000 on some houses outside the capital.

In Dublin there are a few tantalising propositions including two partially finished architect-designed houses on Killiney Hill Road, Co Dublin with a reserve of €200,000 and a five-bedroom house on Upper Kilmacud Road, Co Dublin with a reserve of €275,000 or a three-bedroom house on Iona Road in Glasnevin with a reserve of €360,000.

The failure of the recent mass auction in west Cork by GMAC Properties – when only two of 64 properties sold at auction – casts a shadow. but Ed Carey, an auctioneer and chairman of the SCSI residential property group says he believes the failure of the Cork auction lay in the fact that the reserves were too high.

“We need to stop focusing on properties being discounted from their peak prices, because peak prices are no longer relevant.”

He says the success of the Allsop and Space auction in April shows there is a demand, and that what is stopping many people for purchasing is the lack of finance “which is some comfort. There is a market for the right property at right price and at the end of the day that ’s all people are looking for”.

Report – Irish Times

France has scrapped plans for a new tax that would have cost British holiday home owners thousands of pounds a year.

The U-turn came after intense pressure on President Nicolas Sarkozy from senior politicians representing expatriates who own properties in France.

The tax had been aimed at foreigners with second homes that remain unoccupied for most of the year.

It would have affected around 360,000 homes – more than half of which are believed to be owned by Britons.

Owners would have been charged a tax of 20 per cent of the annual rent that could have been gained from the property.

A four-bedroomed house on the French Riviera could have represented a tax of more than 1,500 pounds a year.

The decision to abandon the charge came after a meeting between President Sarkozy and budget minister Francois Baroin on Saturday.

Political observers said the fact that expatriate home owners will be able to vote for MPs from next year may have prompted the retreat.

Olivier Cadic, who represents the UK for the Council for French Abroad, said the tax would have unfairly punished British home-owners who have restored neglected properties and ‘brought vitality back to deserted rural villages’.

He said even if the tax had gone ahead, it could have fallen foul of EU law by discriminating between residents and non-residents.

He wrote on his blog: ‘It is contrary to the notion of equality that is written in to the French constitution – namely that this tax would create a special group who would be taxed.

‘I am very happy with the decision, which will be a huge relief to non-residents with a second home in France.

‘I think June 18 was a particularly good choice of date for the tax to have its Waterloo!’

Sarkozy won power in 2007 promising that taxes would not rise, but he is under pressure as the May 2012 election looms to fend off left-wing critics who say he has helped a wealthy minority.

Report by Ian Sparks – Daily Mail