Greece presents new proposals to Brussels, analysts highly sceptical

Greece has presented a new set of proposals to its creditors in a bid to buy precious time to broker a medium-term agreement, but at least one leading think-tank warned that any stop-gap measures could be counter-productive.

On Tuesday morning, the Mediterranean nation delivered a six-page document to the European Commission outlining slightly more ambitious targets for public spending and possible new financing options.

In theory at least, the combined measures might give all the parties concerned more breathing space to find a lasting solution while avoiding a full-blown third bail-out programme - possibly until March 2016 if all the financing options were combined, Capital Economics said.

"Only a major default can bring Greece’s debt to GDP ratio back down"

Among the financing options broached by Athens were: purchases of Greek sovereign debt by the European Stability Mechanism and increased ceiling for issuing T-bills and tapping so far unused bank bailout funds.

Very cool reaction analysts

However, demands from Greece's creditors for pensions and labour reforms continued to be unmet.

"It is worth remembering that previous arrangements to buy Greece time have proved counter-productive," Jonathan Loynes, chief European economist at Capital Economics said in a research note e-mailed to clients.

Indeed, the economy was already in recession and the budget position likely to worsen again.

"Only a major default can bring Greece’s debt to GDP ratio back down from 175% to sustainable levels," Loynes added.

"Initial thoughts aren't positive, they sound like a rehash of old proposals already rejected and the likelihood is they will go the same way as previous proposals. Nowhere," chimed in Michael Hewson, chief market analyst at CMC Markets UK.