The German government stuck to its insistence yesterday that Greece must comply with the reform and austerity conditions agreed in its €130 billion rescue package, but Berlin did not flatly reject any extension of the debt-repayment terms it faces, the Irish Times reported. Angela Merkel, the German chancellor, will meet Antonis Samaras, the Greek prime minister, for bilateral talks in Berlin next week, at which “everything can be put on the table”, according to Steffen Seibert, the chancellor’s spokesman.

Portugal’s fiscal reforms are giving investors the greatest confidence in its debt in more than a year, even as its economy struggles under the weight of austerity, Bloomberg reported. Credit-default swaps on Portugal dropped as low as 725 basis points today, from 1,515 in January and 1,237 in May. The contracts have fallen by the most of any government this year and by more than every nation except Ireland in the past month.

The euro zone will slip into recession and won't grow until 2013, according to the latest Reuters poll of economists who also don't expect any new aggressive policy response from the European Central Bank. The latest monthly survey results, released on Thursday, follow news that the euro zone just barely skirted recession in the first half of the year, with only Germany growing in the three months to June and France, the second largest euro zone economy, flatlining.

Pilots for Air France-KLM have backed proposals to alter their contracts and working conditions as part of the airline's three-year restructuring plan, aimed at reducing operating costs and debt, Reuters reported. Labour union SNPL, which represents more than two-thirds of the pilots, said on Thursday 67 percent of its members had voted for the plan. The agreement reached with pilots does not include job cuts, but does feature voluntary transfers with bonuses to Air France-KLM's low-cost arm Transavia.

Europe's banks are making more progress in whittling away their problem with bad loans, but the cloud of uncertainty hanging over the euro zone has slowed the sector's deleveraging, The Wall Street Journal reported. A study by financial-services firm PricewaterhouseCoopers estimates European banks sold a record €27 billion ($33 billion) in noncore loans in the first half of the year, and may sell as much as €50 billion over the whole of the year, after €36 billion in 2011.

Greece continued its flirtation with national bankruptcy Tuesday, successfully staving off a default on debts owed to the European Central Bank, The Wall Street Journal reported. But at the same time, more information dribbled out on the parlous state of its economy and its banking system. Eurostat estimated that the economy shrank by 6.2% year-on-year in the second quarter, and senior bankers said more than 20% of loans to the domestic economy are now officially "nonperforming." They warned that the problem may overwhelm the sector and derail the country's bail-out program.

The long-awaited personal insolvency regime will not be widely used to escape from under mortgage debt, and will come with little cost to banks, rating agency Fitch said, The Independent reported. An outline of the new rules was published in June and is expected to become law later this year. Fitch said it does not expect the changes to have any immediate impact on its rating of Irish mortgage books. It is in contrast to the view of Justice Minister Alan Shatter, who has proposed the new rules.

UK unemployment levels dropped to their lowest in a year as the Olympic Games created jobs, showing the labour market's resilience in the face of deepening recession, the Irish Times reported. Jobless-benefit claims fell 5,900 to 1.59 million, the Office for National Statistics said today in London. The jobless total measured by International Labour Organization methods fell to 8 per cent in the second quarter from 8.1 percent in the three months through May.

Pressure on George Osborne for a softening of the government's hardline economic strategy intensified on Wednesday after leading economists who backed the chancellor's plans in opposition called for immediate action to lift Britain out of double-dip recession, The Guardian reported. In a blow to the chancellor, almost half the economists who strongly supported the Conservative party's deficit-reduction proposals in the runup to the 2010 election said it was time for a rethink and urged the Treasury to take advantage of low borrowing costs to boost spending on infrastructure projects.

A Spanish mayor who became a cult hero for staging robberies at supermarkets and giving stolen groceries to the poor sets off this week on a three-week march that could embarrass the government and energize anti-austerity campaigners, Reuters reported. Juan Manuel Sanchez Gordillo, regional lawmaker and mayor of the town of Marinaleda - population 2,645 - in the southern region of Andalusia, said food stolen last week in the robberies went to families hit hardest by Spain's economic crisis.