We'll keep the blue flag flying here. Photo: Getty Images
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Grexit avoided as Greece reaches "humiliating" bailout deal with Eurozone creditors

After 16 hours of negotiations, a deal has been reached between Greece and its creditors. 

After 16 hours of negotiations, Greece and the rest of the Eurogroup this morning reached a deal on a new bailout.

"There will not be a Grexit," Jean-Claude Juncker, the head of the European Commission, reassured reporters. What there will be instead is €82-6bn worth of new funding, while €50bn of state assets will be privatised, with €37.5bn going to Greece's creditors and €12.5bn going to growth initiatives. Greece will have to reform its VAT arrangements and pensions, and sign up to immediate spending cuts if it breaches its targets.

The deal will be voted on by the Greek parliament by Wednesday and then ratified by the national parliaments of several other Eurozone nations.

The tough terms of the deal mean it will be controversial, with some questioning why Greek leader Alexis Tsipras accepted stringent conditions on new lending after winning a referendum on the bailout last week. Commentators have compared the harshness with the Treaty of Versailles, and Nobel Prize-winning economist Paul Krugman said the terms strayed into "pure vindictiveness".

Germany's Angela Merkel, asked about the Versailles comparison, said that she never made "historical analogies, " while Jean-Claude Juncker said: "I don’t think that the Greek people have been humiliated and I don’t think the other Europeans were losing their face. It’s a typical European arrangement."

Exclusive: "We were set up". Read the NS interview with former finance minister Yanis Varoufakis here.

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Scotland's huge deficit is an obstacle to independence

The country's borrowing level (9.5 per cent) is now double that of the UK. 

Ever since Brexit, and indeed before it, the possibility of a second Scottish independence referendum has loomed. But today's public spending figures are one reason why the SNP will proceed with caution. They show that Scotland's deficit has risen to £14.8bn (9.5 per cent of GDP) even when a geographic share of North Sea revenue is included. That is more than double the UK's borrowing level, which last year fell from 5 per cent of GDP to 4 per cent. 

The "oil bonus" that nationalists once boasted of has become almost non-existent. North Sea revenue last year fell from £1.8bn to a mere £60m. Total public sector revenue was £400 per person lower than for the UK, while expenditure was £1,200 higher.  

Nicola Sturgeon pre-empted the figures by warning of the cost to the Scottish economy of Brexit (which her government estimated at between £1.7bn and £11.2.bn a year by 2030). But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose considerable austerity. 

Nor would EU membership provide a panacea. Scotland would likely be forced to wait years to join owing to the scepticism of Spain and others facing their own secessionist movements. At present, two-thirds of the country's exports go to the UK, compared to just 15 per cent to other EU states.

The SNP will only demand a second referendum when it is convinced it can win. At present, that is far from certain. Though support for independence rose following the Brexit vote, a recent YouGov survey last month gave the No side a four-point lead (45-40). Until the nationalists enjoy sustained poll leads (as they have never done before), the SNP will avoid rejoining battle. Today's figures are a considerable obstacle to doing so. 

George Eaton is political editor of the New Statesman.