Over to Greece where there is further confirmation following a two-day meeting of EU finance ministers that far from being strained the Greek German relationship is going swimmingly. Helena Smith reports from Athens:
First there was the promise of further aid – made by the German finance minister Wolfgang Schauble at the beginning of the year and repeated in Athens today. Then the news with the closure of a two-day meeting of European Union finance chiefs in the Greek capital, that Germany is now actively discussing ways of boosting growth in the bloc’s most indebted member state. “We have, bilaterally as well as in the Euro group, occupied ourselves with, and pushed hard for making the improvement of growth conditions in Greece increasingly the focus of efforts,” Schauble told reporters at the end of the meeting. “We are in talks with the Greek government that we, together with the Eurogroup [of euro area finance ministers], bundle the different measures to improve growth conditions in an action plan.” Schauble’s revelation comes amid the growing realization that if Europe is ever to get back on its feet it will need to redress its social problems first. No other country is more emblematic of the collateral damage caused by austerity than Greece, currently best by record levels of poverty and joblessness.
With Berlin determined to convey the message that the euro debt crisis is over the German finance minister also told Greek public TV: “You are exiting the crisis, the economy is recovering.”
Ahead of crucial euro parliament elections in May, officials signalled that the German Chancellor Angela Merkel would also reward “her friend the Greek prime minister Antonis Samaras” with a visit to Greece next week.
“She will be visiting for a few hours on April 11,” a government source said. “It will be more of a visit of thanks, to show Greeks that with this government and this prime minister, their country has pulled through.” Germany, like most other EU states, are concerned about the prospect of political instability should Samaras' fragile coalition do badly in the polls
Merkel last visited Athens (her first visit ever) in October 2012. She was greeted by mass demonstrations, furious slogans and more than a few Greeks, dressed in SS garb, likening her to Adolf Hitler. This time, Athens is likely to be under lock-down for most of her stay.
Greek finance minister Yiannis Stournaras speaks during a press conference in Athens today. Photo: Louisa GouliamakiAFP/Getty Images Photograph: LOUISA GOULIAMAKI/AFP/Getty Images
And on that note it's time to close up for the evening. Thanks for all your comments, and we'll be back tomorrow.
Ahead of the European Central Bank's meeting on Thursday and the US non-farm payroll numbers on Friday, markets have mostly managed to edge higher. Hopes of a stimulus to the global economy, not just from the ECB but China too, continued to support shares despite worries elsewhere. By the close:
The FTSE 100 finished 6.43 points or 0.1% higher at 6659.04
Germany's Dax added 0.27% to 9629.75
France's Cac closed up 0.18% at 4434.80
But Italy's FTSE MIB dipped 1.02% to 21,692.04
Spain's Ibex ended 0.26% lower at 10,435.8
On Wall Street, the Dow Jones Industrial Average is currently 12 points or 0.07% higher.
On Ukraine, Lagarde said she hoped the geopolitical tensions would ease so Ukraine could recover, and that - as the US tapering talk had an effect before actual tapering happened - she said the talk of sanctions against Russia had also had an effect.
Taking questions, Lagarde is asked if there is agreement on what needs to be done.
She said there was "goodwill", given what she had seen of the finance ministers involved, and she praised Australia's leadership of the G20. But it was not easy to have agreement at G20 and have it agreed when they go back home to their own countries.
Christine Lagarde taking questions with chair John Lipsky Photograph: IMF Photograph: IMF
Back with IMF chief Christine Lagarde, and she concluded her speech:
In many ways, the world is at a critical juncture emerging from the greatest financial crisis in almost a hundred years. Recovery is taking hold but is too slow and it faces several obstacles along the road. Bold policy steps can overcome these obstacles and take the global economy to the next level of more rapid and sustainable growth.
Firstly, a prolonged period of low inflation, particularly in the eurozone, suppressing demand and output. More monetary easing, including through unconventional measures, is needed in the euro area to raise the prospects of achieving the ECB's price stability objective. (NB, the ECB meets tomorrow amid growing hints that either negative deposit rates or bond buying could be on the agenda.) She said the Bank of Japan should also persist with its quantative easing policy.
In the emerging markets, there is the risk of heightened market volatility due to the tapering of quantitative easing in the US.
The final obstacle is rising geopolitical tensions. She said:
The situation in the Ukraine is one which, if not well managed, could have broader spillover implications. There are also other cases of geopolitical tension. Resolving them requires not only good policies, but good politics.
IMF's Lagarde warns recovery is still too weak for comfort
The global economy has stablised since the start of the financial crisis, but the recovery is too weak for comfort, according to IMF managing director Christine Lagarde.
Ahead of the IMF's spring meeting next week of its 188 member countries, Lagarde told the School of Advanced International Studies in Washington:
Unless countries come together to take the right kind of policy measures, we could be facing years of slow and sub-par growth - well below the solid sustainable growth that is needed to create enough jobs and improve living standards into the future.
She said the G20 countries said in February that the right policy action could raise world GDP by more than 2% over the next five years. She said the IMF was well placed to help, but criticised the US for not approving legislation to strengthen the organisation's resources. She said:
This is disappointing, but it is not the end of the story. We shall carry on.
Back with global growth and she said a fragile recovery was underway but needed to change gears towards more rapid growth.
Christine Lagarde speaks in Washington at the School of Advanced International Studies Photograph: IMF Photograph: IMF
New orders for factory goods rose 1.6% in February, the biggest gain in seven months. Analysts had been expecting a figure of 1.2%.
The increase again suggests an economy recovering after the recent poor winter weather, while January's figure was revised down to a 1% drop after the previous 0.7% fall.
Ahead of the US non-farm payroll figures on Friday, the latest monthly report from payroll processor ADP showed the pace of hiring picking up in March.
US private employers added 191,000 workers last month, up from a February figure revised upwards from 139,000 to 178,000. That was slightly below estimates of 195,000 but still showed a rebound after the severe weather earlier in the year hit the economy. Annalisa Piazza at Newedge Strategy said:
Today’s report was widely expected to show less intense effects of adverse weather on job creation in March and a similar improvement is also expected to be confirmed by the Bureau of Labour Statistics non-farm payroll data out on Friday. As such, we rule out that an over-200,000 non-farm payroll will have a massive impact on bond prices.
The ADP and Bureau of Labour Statistics private payrolls are not always perfectly aligned. That said, today's ADP report clearly points in the direction of further improvement in job creation in March. The services sector seems to be the major contributor to job growth in March, with additional 164,000 jobs over the month. This is the strongest reading since November 2013, with services payrolls reflecting more the business cycle rather than the weather-related swings. Goods producing payrolls were little changed in March, up by 28,000 from 25,000. Most of the latter is explained by a rather solid construction sector that added 20,000 jobs over the month.
On the vexed question of UK productivity, this is what the ONS had to say.
Productivity continues to lag despite recent moves of workers from industries with low levels of output per hour to those with higher output.
The ONS call this the "reallocation effect" and estimate that it has added 1.5 percentage points to UK productivity growth between 2008- 2013.
But UK output per hour is still 4.3% below its take.
In case you missed it, take a look at Katie Allen's recent report on UK productivity and why it matters.
More importantly for pay, only with productivity growth can earnings keep growing. The lack of productivity growth in recent years has meant pay growth has stalled and wages have fallen in real terms.
The economy is growing but it hasn't recovered all the ground lost during the recession. GDP grew by 0.7% in the final three months of 2013, but the economy was still 1.4% smaller than it was before the downturn.
Even more jarring is GDP per capita. At the end of 2013, GDP per person was 6.1% below where it was at the start of 2008. In other words living standards have barely recovered to where they were a decade ago.
Here is some reaction from the general secretary of the TUC, Frances O’Grady:
Workers across the economy have experienced a deep squeeze in their pay packets since 2008. Construction workers have been hit the hardest and are currently receiving just 86p for every pound they earned before the crash.
What’s even more worrying is that the recent recovery is failing to raise living standards. Disposable incomes are still falling and people are no better off today than they were nine years ago.
We need a recovery that benefits ordinary families, rather than one where the proceeds of growth just go to the same old wealthy elites.
The reference to construction workers come from ONS statistics showing that real hourly wages in this industry were 13.4% below their pre-downturn level. In contrast, hourly wages for the banking and financial services industry, have fallen by just 4.2% since 2008.
The average decline in wages across the economy is 7.6%.
Most of the recent increase in employment has come from older workers and the self employed, according to the latest monthly economic review from the Office for National Statistics.
Although younger workers are less likely to be self employed and by the beginning of 2012, employment among 25-34 yr olds was picking up.
Welcoming the SMMT car industry report (previous post), the CBI has said that access to the single market and research funding show how important EU membership is to the UK.
Hello, Jennifer Rankin taking over from Graeme Wearden.
Britain's car industry has entered the debate over Britain's membership of the European Union, declaring that it was essential for jobs, investment and growth that we avoid a Brexit.
A survey by the Society of Motor Manufacturers and Traders(SMMT) found that 90% of its members believe staying in the EU would be the best for their business.
John Leech, head of UK head of automotive at KPMG, the consultancy firm behind the report said:
The automotive businesses we spoke to also see the EU as an important bargaining force in global trade negotiations.
Moreover, research and development, which is vital to the UK's ability to be at the forefront of innovation in car manufacturing, is both heavily funded by the EU and requires access to the expertise and free movement of skilled engineers within the EU.
Bank of England deputy governor: Bankers must wait longer for bonuses
Andrew Bailey. Photograph: Getty Images Photograph: Getty Images
Andrew Bailey, deputy governor of the Bank of England, has argued for today that bankers should have to wait rather longer to receive their bonuses, in a bid to enforce responsible behaviour.
Putting bankers' "skin in the game" is essential, he argues, so that money can be taken back if problems emerge in future.
Speaking to ITV News,
Bailey said the current average deferral of three years wasn't long enough.
It is important that bankers understand that they are going to be at risk, as that then conditions their behaviour prior [to potential problems].
Bailey favours "something in between" three years and a whole decade.
You've got to balance that against what might be a rather common sense argument about what is the expected length of people's working lives.
Frankly, I’m not in the business of deferring for a long time into retirement, and we just need to think about that question.
You can watch a clip of the interview here on the ITV News website -- the full interview will be broadcast tonight (6:30pm and 10pm BST).
Bailey's boss, governor Mark Carney, has also argued for longer deferral times for discretionary compensation, in a bid to tie these rewards to long-term performance. Simply put, the longer a banker must be patient, the more likely s/he is to avoid reckless deals that would turn sour in the future.
Bank of England tells @ITVNews it will take action on bank pay a month after Tyrie told @FT it was "seriously flawed" http://t.co/7Q5Lx9ficC
An Anglo Irish Bank branch in Belfast, Northern Ireland, back in 2010. Photograph: PETER MUHLY/AFP/Getty Images Photograph: PETER MUHLY/AFP/Getty Images
Our correspondent in Ireland, Henry McDonald, points out that Ireland's unemployment levels have now fallen for 21 months in a row (see 12.18pm for details)
But while
today's falling jobless figures indicate that Ireland is slowly recovering
there were reminders in court number 19 of Dublin's Central Criminal Court of the days of excessive lending by banks during the Celtic Tiger years.
Henry reports :
An expert witness for the RBS-owned Ulster Bank admitted in court that the practice of banks seeking out customers to lend them money rather than the other way round was highly unusual.
Tom Reid, the former director of risk at the Ulster Bank, was giving evidence at the trial of three executives from the now defunct Anglo Irish Bank.
Sean FitzPatrick, Pat Whelan and William McAteer have pleaded not guilty to charges that they unlawfully provided finance to 16 individuals including Sean Quinn - Ireland's one time richest man who became a bankrupt after the financial crash.
In court today, Reid was asked about the practice at Anglo where bankers sought out customers to offer loans unlike the other way round in most other financial institutions in Ireland.
Asked by prosecuting counsel if this practice was used in the Ulster Bank's dealing with customers, Reid said: "No, not in my experience."
As an ex director of risk at the Ulster Bank, Reid told the jury that he "would have been concerned" if fellow bankers in the same institution were involved in seeking out customers for loans rather than the normal practice.
Reid also told the court that Anglo Irish Bank only had one branch in Dublin while Ulster and the other pillar banks had dozens of branches in the city. Nor did Anglo Irish Bank, to his knowledge at least, have a single ATM machine for dispensing cash.
The Ulster Bank executive who worked for the financial institution for 40 years later told the court he would never have approved a €45 million loan to the so-called Maple 10 - a group of wealthy investors Anglo Irish Bank sought out to persuade to buy shares in their bank in the summer of 2008.
Reid said it was not normal for a bank to be offering borrowers a deal in which they would only be 25% liable for loans in order to buy shares in Anglo Irish Bank.
He insisted that Ulster Bank's borrowers were meant to be pay back 100 per cent recourse on their loans, and that he - as head of risk - would never had allowed the Maple 10 a deal of 25% recourse.
Unemployment in Ireland has fallen to its lowest rate in almost five years, before the eurozone debt crisis began.
The Irish Live Register (including people claiming jobless benefit, and casual workers) fell by 1,800 to 396,000 in March, on a seasonally adjusted basis. That pulled the country's jobless rate down to 11.8%, from 11.9% in February, the lowest rate since April 2009.
On an annual basis, the Irish unemployment total has dropped by 34,000 since March 2013, the Central Statistics Office reported:
The number of male claimants decreased by 25,807 (-9.6%) to 243,189 over the year while female claimants decreased by 8,049 (-5.2%) to 148,043.
Photograph: CSO Photograph: CSO
Philip O’Sullivan, chief economist at Investec, said the latest improvement in the Live Register figures “partly reflects the return to positive net job creation in the economy” (quote via the Irish Times).
But it also reflects the fact that many people have been forced to emigrate from the Republic in search of work since Ireland entered the bailout programme which finished at the end of 2013. The Irish jobless rate peaked at over 15% in 2012.
Financial analyst @moved_average kindly provided this chart showing that the recovery in Greece's bonds (see here) has not been mirrored, at all, in its labour market:
Fears that the eurozone is sliding into deflation have been heightened by a new survey showing that the prices charged by factories across Europe fell in February, and by more than expected.
The producer prices index fell by 0.2% month-on-month, mainly due to cheaper energy prices. Economists had expected a 0.1% drop in the measure, which tracks what factories charge for their products.
Eurozone producer prices, to February 2014 Photograph: /Eurostat Photograph: Eurostat
On an annual basis, industrial producer prices tumbled by 1.7% across the eurozone, Eurostat reported.
It was primarily caused by a 4.4% drop in the energy sector prices, but also due to a 1.8% drop in intermediate goods prices. Prices of capital goods (heavy machinery etc) rose by 0.4%, non-durable consumer goods rose 0.6%, and by 0.9% for durable consumer goods.
Prices in total industry excluding energy fell by 0.5%.
Producer prices fell in almost all EU member states:
The largest decreases were observed in Cyprus (-5.4%), Lithuania (-4.6%), Belgium (-4.2%), Slovakia (-3.8%) and Greece (-3.5%), and the only increases in Ireland (+1.1%), Latvia (+0.5%) and Malta (+0.3%).
A timely reminder, with the ECB holding its monthly meeting tomorrow.....
Britain's construction industry has now been growing for almost a year, as World First's Jeremy Cook points out:
“A growth next month will see twelve consecutive months of growth for the first time since the global financial crisis. Once again it was the housing market that drove demand onwards; something that is not at all surprising given this morning’s Nationwide house price index showing the average rising by 9.5% year-on-year.
“The one caveat to all of this is the impact of the rate of growth on supply chains; sub-contractors are stretched to breaking point and may provide a break, but not a stop, on further improvements…”
Rob Wood of Berenberg bank says the construction boom (see 9.52am onwards) means the UK economy will probably grow faster than expected this year:
Having been hit hard by the recession and government cut backs, low interest rates, rising confidence and surging house prices are combining in a sweet spot for the sector.
That is yet another reason to think the UK will easily outperform consensus growth expectations this year.
David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, says confidence in the UK construction sector is "soaring":
As the rain gave way to sun, the housing market reclaimed its spot as the star performer. Commercial activity continued to rise strongly, benefitting from the positive business conditions. By contrast, civil engineering activity slowed somewhat, perhaps not that surprising following last month’s stellar figures.
But he also echoed Markit's warning that the sector could suffer supply problems if, say, brickmakers can't keep up with demand.
Encouragingly, employment among construction companies continued to rise in March:
Markit reports:
Increased work on new projects contributed to a sharp rise in employment numbers across the construction sector. The rate of job creation picked up over the month and was the second-fastest since August 2007.
A reminder of the old adage that firms take on more staff when they have more demand, not when they have higher profits.
UK construction outlook hits seven-year high as strong growth continues
UK construction PMI, to March 2014. Photograph: /Markit Photograph: Markit
Confidence among UK construction firms has hit the highest level in over seven years, as housebuilders continue to drive strong growth in the sector.
Markit's monthly construction PMI survey, just released, showed that confidence about the 12-month outlook hits highest level since January 2007.
Although new business volumes hit a six-month low, optimism is being driven by "improving underlying demand and more favourable business conditions". Almost 60% of builders surveyed expect to enjoy higher activity than a year ago, and only 5% expect a fall.
Markit: "Confidence about the 12-month outlook hits highest level since January 2007" What could go wrong? #HelpToBuy
Continuing the theme of the morning, housebuilders reclaimed their place as the fastest-growing part of the construction sector.
Commercial construction activity also rose sharply, close to its fastest rate since the summer of 2007.
Civil engineering, though, saw a drop in growth - as emergency work prompted by the winter flooding dried up.
The overall construction PMI for March came in at 62.5, denoting strong growth (any reading over 50 shows that activity increased). That's slightly lower than February's 62.6.
But as firms keep winning more work, there are growing concerns that raw materials could run short.
Tim Moore, Senior Economist at Markit, explains:
“House building reclaimed its place as the main driving force behind the resurgent UK construction sector in March, following some weather-related disruptions during the previous month.
“The rise in residential construction was one of the sharpest experienced over the past ten years, helped by strong demand for new development projects and supportive funding conditions.
“Improving economic fundamentals led to a faster rise in commercial activity during March, while civil engineering growth eased sharply from the survey- record high seen amid the flood relief efforts in February.
“Expectations for construction growth over the year ahead have now reached their highest since the start of 2007, and a strong pipeline of new work is fuelling job creation across the sector.
“However, the latest survey does little to dispel concerns that supplier capacity will become a fly in the ointment. Lead-times for the delivery of construction materials lengthened in March by one of the greatest amounts since the survey began in April 1997, while sub-contractor availability fell at the fastest rate for thirteen-and-a-half years.”
UK construction market, by subsector Photograph: /Markit Photograph: Markit
In the bond markets, Greece's borrowing costs have fallen to their lowest level since the eurozone debt crisis began.
The yield, or interest rate, on its 10-year bonds has fallen to just 6.4% -- further away from the dangerous levels that forced it to take a bailout. That's the lowest level since 2010, according to Tradeweb.
Greek 10-year bond yields Photograph: /Thompson Reuters/Tradeweb Photograph: Thompson Reuters/Tradeweb
This latest sign of confidence in Greece's ability to repay its debts comes a day after eurozone finance ministers agreed to advance the next slice of its bailout.
Athens is now planning to issue some longer bonds later this year - the first stage in returning to the financial markets (unless a third bailout should be needed)
The FTSE Eurofirst 300 is up 0.2 per cent after its Asia-Pacific peer added 0.4 per cent. Together, they are helping the FTSE All-World equity index rise 0.2 per cent to 272.6, a seventh consecutive day of gains that takes the worldwide benchmark to its highest since December 2007. Another 2.6 per cent rise and the All-World will be in record territory.
London's housing market is running hottest in two of its less trendy areas -- Brent (up 31% annually) and Lambeth (+30%). (click on the image below for the full breakdown).
Interesting that London house price growth no longer just posh areas. Brent & Lambeth now fastest growing in capital pic.twitter.com/zBRlWYmE9p
Here's Hilary Osborne's news story on today's Nationwide survey:
House prices in London have increased by almost a fifth over the past 12 months, and are now 20% above their pre-crisis peak, according to the latest data from the country's biggest building society.
In news that will fuel concerns of a price bubble in the capital,Nationwide building society said the average price of a London home had increased by 18% over the year and by 5.3% in the past three months alone, and at £362,699 was now more than twice the figure for the rest of the UK.
Over in the eurozone, Spain's unemployment total fell by 16,000 in March. That's the second monthly fall in a row, after dropping by 1,900 in February.
Here's Reuters' early take:
The number of people registered as jobless in Spain fell by 0.35 percent in March from a month earlier, or by 16,620 people, leaving 4.8 million people out of work, data from the Labour Ministry showed on Wednesday.
The figure marks the second straight month of declines and is the sharpest monthly fall for March since 2006, the Ministry said.
Alex Gosling, managing director at online estate agents Housesimple.co.uk, says today's figures must be depressing reading for anyone trying to get onto the housing ladder.
Nationwide say house price growth shows "tentative signs of moderation" - tell that to the thousands of Londoners priced out of the market.
“The influx of wealthy overseas buyers continues to drive up house prices. And whereas they helped prop up the market after the financial crash, they're now a hindrance to hard working Londoners on average salaries.
"In the capital, if you can't make a healthy withdrawal from the Bank of Mum and Dad, then average salaries simply don't cut the mustard.
The situation is so acute in London that many properties are being snapped up within days, with hordes of potential buyers racing to squeeze in a viewing (see Amelia Gentleman's piece on Hackney: Journey to the heart of the house price bubble)
And with real wages lagging, Gosling is seeing signs that some house buyers are taking serious risks:
"London homeowners can pretty much name their price at the moment. The asking price being marketed is more often than not no reflection of the price a property is sold for.
We are seeing a significant number of properties going for above asking price, and in some cases tens of thousands of pounds above.The worry is that buyers, in their desperation to secure a property, are over-stretching themselves."
Rising house prices put more pressure on the Bank of England to act before economic stability is threatened.
IHS Global Insight's Howard Archer, who reckons the average price will rise by at least 8% this year, says policymakers need to keep "a very close watch" on the market:
Once strong upward momentum has developed in the housing market, it can be hard to stop – especially if interest rates are unlikely to rise markedly. In the budget, the Chancellor asked the Bank of England’s Financial Policy Committee to be particularly vigilant against the emergence of potential risks in the housing market.
One option, he says, would be to dilute the government's Help to Buy mortgage guarantee scheme:
While the Bank of England currently does not currently see excessive house price rises outside London, [governor] Mark Carney has expressed concern about the UK’s past record of house booms and busts, and we believe the bank will take further action later this year to try and dampen the housing market having already ended Funding for Lending Support for mortgage lending.
This could very well include the Bank of England recommending to the government that it dilutes the Help to Buy mortgage guarantee scheme. In particular, the £600,000 price limit for a house under the scheme could be cut, perhaps to £300,000.
Readers in Sunderland have not benefitted from the housing recovery -- prices there have risen just 1% annually, less than inflation or average wage increases.
Good morning, and welcome to our rolling coverage of events across the financial markets, the economy, the eurozone and business.
We start with fresh proof that London house prices are roaring ahead, with the gap between housing in the capital and the rest of Britain hitting a record level.
Nationwide's latest report shows that London house prices have surged by 18% over the last year, double the national average of 9.2%. That's the strongest annual price rise in a decade.
With South East England also posted annual double-digit gains in the January-March quarter, it's the latest signal that the economic recovery is being felt mainly in and around the city -- deepening Britain's economic divide. In Wales, for example, prices are up just 5%.
While the typical UK property now costs £180,264, the average London house price is now £362,699
Robert Gardner, Nationwide's chief economist, said:
"The gap between house prices in London and the rest of the UK is the widest it's ever been, both in cash and percentage terms.
"Overall, the southern regions have been outperforming for some time, with the result that house prices in London, the Outer Metropolitan and Outer South East have now surpassed their pre-crisis peaks. "
Cheap credit, low interest rates, and the recent upturn in the economy appear to be working like an exhilarating cocktail on the housing market, in some parts of the UK anyway:
Photograph: /Nationwide Photograph: Nationwide
Photograph: Nationwide Photograph: Nationwide
Gardner added that while London house prices are a fifth higher than their pre-crisis peak in 2007, while other areas are still lagging:
Although all regions saw annual house price growth in Q1, ten of the thirteen regions have yet to surpass their pre-crisis peaks. London, the Outer Metropolitan and the Outer South East are the exception.
There are also signs, though, that the surge in house prices could be slowing.
Prices rose by just 0.4% during March, the slowest monthly expansion since last June.
Reaction,and a few interesting graphs, to follow....along with other breaking news through the day....
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