German parliament votes in favour of third bailout package for Greece

Germany's parliament has voted in favour of a third bailout for Greece, removing the last major obstacle to European Union approval of the €86bn package.

The Bundestag signed off its approval with 454 votes in favour, 113 against and 18 abstentions.

With a €3.2bn loan due for repayment to the European Central Bank on Thursday, a conference call between the European Stability Mechanism’s board of national finance ministers on Wednesday evening should approve the loan package and quickly result in the payment of the first €26bn tranche of the package.

There was some relief that the Bundestag did not impose any additional conditions on the deal, after fears that Germany's continued support might be dependent on future International Monetary Fund involvement in fiscal monitoring of Greece.

But Greece is still not out of the woods, warned Capital Economics, as it will have to pass regular reviews to be eligible for future aid payments and its requirement to run ever rising primary budget surpluses is based on growth forecasts that seem "far too optimistic".

Senior European economist Jennifer McKeown pointed out that while Germany has not yet formally insisted on IMF involvement, Chancellor Angela Merkel has stated that she expects the Fund to participate from October, after the first review.

"But IMF head Christine Lagarde has said that it will not do so unless reforms are further specified and the euro-zone creditors offer debt relief 'well beyond what has been considered so far'. Both conditions are in significant doubt."

"In all, then, we suspect that the new deal could soon unravel, with a potential flashpoint coming in October this year. And we still see Greece leaving the euro-zone in the next twelve months."