Indebted households without asset wealth are particularly vulnerable to deflationary dynamics - and the UK has a lot of themThis time last year the Institute for Public Policy Research (IPPR) made a compelling case for keeping interest rates at their historic lows, arguing that although the recovery looked to be on an increasingly sure footing, we were some way off generating inflation through domestic wage pressure, and that if anything, the global growth slowdown meant inflation looked set to fall below 1% in the coming year.That view now looks prescient, to say the least. Consumer price inflation spent another month at near-zero levels in November, with prices by the CPI measure a mere 0.1% higher on average than a year ago. This makes it a virtual certainty that 2015 will be a year of zero or near-zero consumer price inflation: the first time this will have happened in the CPI’s 27-year history. Continue reading...

Banks and energy companies take the hit as investors face global headwinds from slowing Chinese economy and depressed commodity pricesAustralian shares have closed down sharply as uncertainty about the direction of the Chinese economy and markets saw volatile trading across Asia Pacific.

Manufacturing output declines in China, India and US, leading investors to turn to gold investmentsFigures from China showing that factory output contracted for a 10th straight month in December pointed to a continuation of 2015’s global economic slowdown and the likelihood of worse to come.Related: Jitters over China manufacturing slowdown wipe £38bn off FTSE 100Related: Investors nervous as China looks set to repeat mistakes of last summer Continue reading...

New orders also disappoint in December as firms blame continued slowdown on falling demand for consumer goods and machine toolsUK factories entered 2016 in a “state of near stagnation” following a decline in output growth and new orders during December.Firms blamed the weaker than expected growth on falling demand for consumer goods and machine tools, which have experienced a long slowdown in growth since a peak in 2014 apart from a recovery in the summer.Related: Recovery 'too reliant on consumer debt' as BCC downgrades forecastRelated: Factories forecast to shed tens of thousands of jobs in 2016 Continue reading...

UK stocks tumble as renewed concern over global economy spooks marketsThe FTSE 100 index had £38bn wiped off its value as global stock markets started the year with a rout sparked by fresh fears over the Chinese economy.Investors returning after the Christmas break were greeted by turmoil on stock exchanges, with Germany’s share index posting its worst start to a new year on record and London’s FTSE 100 putting in its second-worst start. As European markets closed, Wall Street looked set for the sharpest new year losses since the 1930s. Continue reading...

Last year was deeply tumultuous for the troubled country but with growing fears of social unrest, 2016 could be even more unpredicatableWhen Stavros Staikos thinks of the year ahead, he expresses dread. Although stoic in demeanour, the retired merchant seaman struggles to be upbeat about his country and his own circumstances. “It’s hard to be optimistic,” he says, waiting his turn for financial advice in the central Athens branch of the Union of Consumers and Borrowers. “Who’d have thought it would come to this? Who’d have thought that at the age of 63, I’d be worried sick about losing my home.”Like an odyssey without end, Greece’s great economic crisis goes on and the predicament of people such as Staikos is igniting new fears of social unrest. Continue reading...

Share trading in China halted as survey renews fears of economic slowdown.Eurozone manufacturing improves, but UK and US below expectations.Around £38bn wiped off FTSE 100.5.38pm GMTSo it’s been a not-so-happy new year start on stock markets.Any investors hoping 2016 would bring some fresh market forces will have been spooked by a very familiar pattern today, as weak manufacturing data from China again provided much of the (downward) momentum.5.01pm GMTTime for a round-up of European stock markets at the close and on many exchanges it’s clearly been the worst start to the year for many years.The FTSE 100 has lost almost 2.4% on the first day of trading in 2016, that’s a drop of 149 points to 6093. The bluechip index is now at its lowest since 22 December and today marked the biggest one-day drop since a 2.5% fall on 28 September 2015. It is also the second worst opening day on record, says RBS.FTSE 100 posts 2nd worst opening day on record, down 2.6%. (h/t/ @asentance for eagle eyes on chart) pic.twitter.com/ctqs8uXj3jIf the Dow closes where it is now, down 2.2%, it will be its worst opening day performance since 1932, when it fell 8.1% on Jan 4 that year.Dow's worst starts to a year over the past century: -8.1% in 1932 -2.3% in 1922 -1.8% in 1983 -1.7% in 1930, 1980 and 2008 Currently -2.5%4.33pm GMTJust when you thought it might be safe to bet on a rising oil price, Brent crude has turned negative.It had rallied to a session high of $38.99 a barrel earlier on the back of predictions supply could be hit by tensions between Iran and Saudia Arabia. But the price fell back on worries about slower demand after news of a further factory slowdown in China and releases from the US showing its construction and manufacturing sectors had lost steam.4.23pm GMTMeanwhile, former Bank of England policymaker David Blanchflower has been scouring the skies for omens....Just saw my first adult bald eagle of 2016 not sure what it means as stocks plunge but I couldn't see any vultures circling though4.18pm GMTSweden’s central bank has come a step closer to intervening in currency markets to weaken the crown, which it worries is keeping inflation from rising back to more normal levels.Against the backdrop of negative interest rates, a quantitative easing programme and a Swedish inflation rate in negative territory at -0.1%, the Riksbank’s governor Stefan Ingves said last week the central bank was ready to start currency interventions to stop the crown from strengthening.“Since the last monetary policy meeting in mid-December, the Swedish krona has appreciated against most other currencies. If this development were to continue, it could jeopardise the ongoing upturn in inflation.”3.51pm GMTWith global downturn fears prompting such a rocky start to the new year for global markets, what perfect timing for the IMF’s new economist to share his predictions for 2016.

Surprise announcement that Treasury’s most senior civil servant will quit role in April triggers search for his successorSir Nicholas Macpherson, the Treasury’s most senior civil servant, will step down in April after 10 years advising successive chancellors of the exchequer.The surprise announcement will trigger a search for a new permanent secretary, most likely from the ranks of the Treasury’s senior staff, although the No 10 adviser Tom Scholar was cited by some insiders as a possible successor.

Figures show consumer credit rose by 8.3% in the year to November, with borrowing on credit cards up by £411mConsumer borrowing on credit cards, loans and overdrafts is growing at its fastest rate since before the financial crisis, according to Bank of England figures that brought further warnings over the state of UK household finances.Unsecured consumer credit was up 8.3% in the 12 months to November 2015, the Bank’s figures show, with consumers borrowing an additional £1.5bn in November. This was compared to an average increase of £1.2bn over the previous six months. The growth rate was the highest since February 2006.This will fuel concern that consumers are borrowing more and saving less to finance their spending Continue reading...

Uncertainty over EU vote and fragile global recovery means that confidence has fallen back to where it was in 2012Worries about the eurozone and shaky prospects for the wider global economy have dented confidence among bosses of the UK’s biggest companies, according to a survey.After a tumultuous 2015, when a downturn in China and sharp slowdown in global trade prompted big businesses to scale back spending plans, the year ahead will be marked by even more caution, a poll of chief financial officers (CFOs) suggests. Continue reading...

Low forecasts for pay growth contradict chancellor’s claim that rise in wages will compensate for Tory cuts to in-work benefits, says oppositionThe 10 years between 2010 and 2020 are set to be the worst decade for pay growth in almost a century, and the third worst since the 1860s, according to new research.Research from the House of Commons Library shows that real-terms wage growth is forecast by the Office for Budget Responsibility to average at just 6.2% in this decade, compared with 12.7% between 2000 and 2010.Related: UK job data: pay growth slows to 2%Related: Stalling UK wage growth set to revive debate over migrant workers Continue reading...

The Future Cities Catapult aims to improve policymaking – be it for better flood defences, banking or medicineWhen London’s Soho was hit by a cholera outbreak in the summer of 1854 it took a maverick to pinpoint the cause and come up with a way to contain it.

The chair of the Treasury select committee offers the one hope of real action over the continuing culture of greedA new year and, for bankers, it seems, a new regime. Not a tough new rule book which would help regulators to clamp down on the outrageous behaviour that caused the 2008 crisis and the ensuing economic recession, but a regime in which an official review into the culture of banking has been abandoned and the government has U-turned on a pledge to toughen up the rules holding senior bankers to account.What has prompted this change of heart? Have the bankers mended their ways after the $150bn (£96bn) of fines imposed on major banks since 2008? (Those fines, incidentally, have deprived the real economy of $3tn of credit, holding back growth around the world.) Perhaps rules to clamp down on bankers’ bonuses have finally started to erode the “greed is good” culture of the City? Or have banks started to treat their customers with respect after paying out £27bn in compensation for sustained mis-selling of payment protection insurance? Continue reading...

Our outgoing economics editor on what she will regret not having to deal with in the world of politicsAs I depart this pleasant berth to cover politics for the Guardian, after almost 15 years writing about the twists and turns of the global economy, there are plenty of things I will leave behind lightly – not least a dusty pile of unread books – but, if you will excuse the self-indulgence, dear readers, here are a few things I’m missing already:Nerds

Factory activity cools for fifth month running as overseas demand for Chinese goods continues to fallA further slowdown in China’s vast manufacturing sector has intensified worries about the year ahead for the world’s second largest economy.The latest in a string of downbeat reports from showed that activity at China’s factor ies cooled in December for the fifth month running, as overseas demand for Chinese goods continued to fall.Related: Opinion is divided on state of Chinese economy, but not on its importance Continue reading...

It is difficult to gauge true fragility of China, but economists agree it will have profound impact on the rest of the world in 2016It was perhaps fitting that China’s latest lacklustre industrial survey was the first fragment of financial data to greet the new year. Economists are divided about the risks facing the vast Chinese economy, but agree that how they play out will have profound consequences for the rest of the world in 2016.The optimists point to China’s large and growing middle class, the vast foreign currency reserves that give Beijing ample ammunition to respond to any crisis that emerges, and the authoritarian regime that allows its policymakers to force through economic change.Related: China manufacturing shrinks again but stimulus gives boost to house prices Continue reading...

London investors miss out on returns enjoyed by rival stock markets in Frankfurt, Paris, Tokyo and ShanghaiCity investors are nursing losses after the FTSE 100 ended the year as one of the worst performers among global stock markets.Britain’s biggest share index shed almost 5% during a volatile 12 months dominated by the commodities crunch and fears over China’s slowing economy.

Cheap credit and petrol have got Britain motoring but the Bank of England must hit the controls at the right timeThe UK ends 2015 as one of the fastest growing of the major developed economies. Unemployment is falling, the housing market is hot and consumers are happy to spend money in the shops or online. For at least the first half of 2016 it will be a case of more of the same. The reason is simple. The UK economy has plenty of momentum thanks to almost seven years of zero interest rates, rising living standards and government incentives to buy property. Even if there was a sudden nasty shock, it would take time for the effects to show up.As it happens, recent developments have been positive for growth. The fact that motorists can find petrol for less than a pound a litre reflects the tumbling price of oil on the global commodity markets. That will cut business costs and raise corporate profits while at the same time cutting domestic heating bills and the cost of travel. Continue reading...

Space explorers, genetic scientists, US voters, terrorists and hackers look set to dominate our world next year – but don’t rule out the odd pleasant surpriseNever make predictions, especially about the future. So said Mark Twain, Yogi Berra or Niels Bohr – or possibly all three.But if you must, there are really only two options: play safe and go for the obvious, or come up with forecasts so giddily optimistic that no one will take you seriously.Related: OECD fears slowdown in global trade amid China woes Continue reading...

Economic outlook has deteriorated, with rising US interest rates and Chinese downturn increasing risk of instabilityGlobal economic growth will be disappointing next year and the outlook for the medium-term has also deteriorated, the head of the International Monetary Fund has warned.The IMF managing director, Christine Lagarde, said the prospect of rising interest rates in the US and an economic slowdown in China were feeding uncertainty and a higher risk of economic vulnerability worldwide.Related: IMF chief Lagarde warns of disappointing global growth in 2016 – as it happened Continue reading...

Tax expert Richard Murphy, widely credited with inspiring Labour’s economic policy, explains why he’s not suited to being behind the scenes“It was amazing how quickly the cold shoulder came on.” Richard Murphy, tax expert and father of Corbynomics, has heard nothing lately from Labour’s shadow chancellor and Jeremy Corbyn’s right-hand man, John McDonnell.Back in the summer, when he was propelled into the political limelight by the Corbyn leadership campaign, which was keen to show it had a coherent economic platform, Murphy began to assume he would take a senior role in Labour’s shadow Treasury team.Related: Can Corbynomics guru Richard Murphy fix Britain?Related: The Joy of Tax is no laughing matter, David Cameron | Richard Murphy Continue reading...

In an unprecedented year for the oil business, each of the major producers has its own problems. How will they react?A glut of oil, the demise of Opec and weakening global demand combined to make 2015 the year of crashing oil prices. The cost of crude fell to levels not seen for 11 years – and the decline may have further to go.There have been four sharp increases in the price of oil in the past four decades – in 1973, 1979, 1990 and 2008 – and each has led to a global recession. By that measure, a lower oil price should be positive for the world economy, with lower fuel costs for consumers and businesses in those countries that import crude outweighing the losses to producing nations.Related: Saudi Arabia's $640bn questionRelated: Nigeria overtakes South Africa to become Africa's largest economyRelated: Rouble in freefall despite rate hike Continue reading...

Low oil prices, western sanctions and a falling rouble have forced Moscow to rethink its ambitious plans for a Moon exploration, according to reportsRussia is revising the scale of its space programme, the national space agency has said, after a newspaper reported that the government may be forced into billions of dollars of cuts to its ambitious Moon exploration plans.

Up to 400,000 jobs are expected to be created in 2016, but the pool of skilled migrant labour will make it hard for workers to restore pay to pre-crash levelsAverage pay growth for Britain’s workers is likely to stall at about 2% in 2016, as the ready availability of migrants makes it easy for employers to fill vacancies, according to a forecast of the labour market.In its annual assessment, the Chartered Institute for Personnel and Development (CIPD), which represents the human resources profession, says job creation will remain strong over the next 12 months, but wage growth has reached a plateau.Related: Factories forecast to shed tens of thousands of jobs in 2016 Continue reading...

The charges against a notorious Manhattan hedge fund manager expose a lazy business model that puts shareholder profits above investment in the products of the futureSchadenfreude, thy name is Martin Shkreli. Few arrests this year can have been greeted with as much jubilation as that of the one-time Manhattan hedge fund manager. Not in outrage at the actual charges of securities and wire fraud – but because the cuffing was seen as payback for Mr Shkreli’s unrelated practice of buying old life-saving drugs then jacking up the price to eyewatering levels. Take Daraprim, a 62-year-old cure for a life-threatening parasitic infection – bought in August by Mr Shkreli, who then hiked the price overnight from $13.50 a tablet (just over £9) to $750 (a little over £506). That move united the Democrat presidential rivals Bernie Sanders and Hilary Clinton – not to mention medical professionals and much of the public – in dismay and condemnation. Mr Shkreli goes so far as to blame that furore for his arrest – which is a convenient position for any defendant to adopt.What was it about that story that turned so many stomachs? One aspect must have been the sheer parasitism of the business model. As a doctor at the Icahn School of Medicine at Mount Sinai asked plaintively, “What is it that they are doing differently that has led to this dramatic increase?” The answer, of course, was: nothing. For many, this broke a fundamental rule of capitalism – that reward should be commensurate with risk. Continue reading...

Investors snap up riskier assets such as stocks and emerging market currencies on the back of the rally in oil prices

JLR is popular in China, but the slowing economy could dent carmaker’s prospects in one of its most enthusiastic marketsSu Weiping marches into Beijing’s biggest Jaguar Land Rover showroom wearing a thick gold chain and an ear-to-ear grin.“I’ve bought this one,” said the 58-year-old businessman, pointing to a bright red Discovery Sport. He has just laid down 408,000 yuan (£42,000) for the British off-roader. “It’s for my daughter. She loves this brand!” Su said, as he inspected his purchase. “Everyone dreams of having one.”Related: Jaguar Land Rover's £1bn factory in Slovakia 'could threaten UK jobs' Continue reading...

Report finds that in first three quarters of 2015 food, petrol and energy costs were all down year on year, and wages finally rose in real termsCheaper petrol and food left households with more money to spend on new cars, furniture and going out this year.A new report into disposable incomes highlights how lower spending on essentials in 2015 meant Britons were able to buy more luxury items like jewellery and watches as well as spending more on their homes and gardens.Related: 2016 will be a year of living dangerously for the global economy Continue reading...

Almost 2 million more children than now will be in poverty in 15 years’ time, says thinktank analysis of government policiesAlmost 2 million more children than there are at the moment will be in poverty at Christmas in 15 years’ time, according to a highly critical thinktank analysis of government policies.Related: With no opposition, the Tories are free to do what they like | Nick Cohen Continue reading...

Manufacturers’ organisation EEF predicts sector will see modest growth but cautious mood will prompt further cuts to UK jobs and investmentBritish manufacturers will shed tens of thousands of jobs next year as they battle a tough export market, the fallout from steel plant closures and a collapse in demand from the embattled North Sea oil industry, an industry group has forecast.The manufacturers’ organisation EEF said the factory sector will shrug off this year’s recession and eke out modest growth in 2016 but it warned a number of risks loom on the horizon, chief among them a sharper downturn in China that could trigger a global slump.Related: UK manufacturing expects hard winter aheadRelated: The whole ecosystem of working-class life is at stake in Britain’s steel crisis | Paul Mason Continue reading...

Shadow chancellor highlights downgrading by official economists of likelihood of budget being in surplus by end of parliamentGeorge Osborne has been described by his Labour counterpart as the “coin-toss chancellor” after official figures indicated that prospects for the success of plans to make spending targets have been downgraded.Figures in last month’s autumn statement suggest the chancellor now has a 50/50 chance of getting the budget into surplus as promised by the end of the parliament. Continue reading...

As oil prices fall further, China slows and Brazil risks collapse, cracks will be papered over and the scene set for a new implosionEconomic forecasting is a mug’s game. One thing that has been learned from the financial crisis and Great Recession is that even those equipped with the most sophisticated models get it wrong, sometimes spectacularly.So it is with both humility and trepidation that I will try to fulfil a promise made last week and make predictions for what is going to happen in 2016. In all honesty, the future is unknowable and anybody who says otherwise is lying.Related: Oil price falls to 11-year low with global glut expected to deepen in 2016Related: Five factors that shook the world’s markets in 2015Related: Brazil has debt rating cut to 'junk' status as problems mount Continue reading...

60 students at Coventry University divide their time between lecture halls and Unipart’s nearby site, working on live projects“Ever since I was a child, I was always interested in taking things apart and seeing how they go back together,” says 19-year-old Nick Hugill.“The video player if it was broken, the TV. It was pens mainly. My dad would get annoyed that there wasn’t a working pen in the house.”

Cameron and Osborne blame their spending cuts on the Blair/Brown legacy, when really it’s all about their obsession with tax cutsI did not get where I am today predicting the future of the Labour party’s electoral prospects; nor, for that matter, by forecasting the outcome of a referendum called by a prime minister prepared to gamble with the future of the United Kingdom in order to keep his party in office.For, although it may now be conventional wisdom that Ed Miliband was never going to win an election in a thousand years, it did not seem such an odds-on bet to David Cameron at the time, when, frightened by the threat to his position by Ukip and his Conservative colleagues, he committed himself to the coming referendum. Continue reading...

The Big Short is released in the new year, but greed and financial crashes have long been popular cinema themes. Here are our business team’s top picksFor filmmakers, the financial crisis just keeps on giving. January sees the UK release of The Big Short, the latest in a line of dramas and feature-length documentaries about the high-stakes world of financial markets leading up to the crash.

Rolling coverage of the latest economic and financial news, as the London stock market closes for Christmas1.07pm GMTRoll out the brandy butter and put on the party hats.The London stock market has closed, and won’t reopen until Tuesday 28th.Volumes are thin across Europe today, with some markets already shut for the holidays.However, in London the session has seen the FTSE 100 add some small gains to its tally for the week, having seen a decent bounce over the last two days. Even now, miners are in the news, having dominated the agenda so much of late. Anglo American has managed to add some small change to its dwindling cash pile as it sells off a coal mine in Australia – disposals were a key theme for miners in recent months, and the fire sale will continue into the New Year.12.49pm GMTLove him or hate him, Yanis Varoufakis was undoubtedly one of the key figures of this year.Some see the former Greek finance minister as a valiant champion of anti-austerity polities, others blame him for driving Greece back into recession, capital controls and a tough third bailout.“I regret that we were a failure. A heroic failure, but a failure nonetheless.”Stories of 2015: Yanis Varoufakis, Syriza's anti-austerity motorbiker https://t.co/BDSoZU0R9B12.15pm GMTMarks & Spencer is feeling the pre-Christmas love.... its shares are now up 1.1%.They have fallen more than 10% this month, pushed down by fears that it might struggle this Christmas.11.57am GMTSo much for the oil price rebounding.... Brent crude is now down 1%, as its early gains evaporate.11.52am GMTConner Campbell of SpreadEx says the markets look rather weary today, after posting a 2% jump on WednesdayHeading into the Christmas break with all the enthusiasm of someone who has received the ugliest jumper imaginable, the markets are failing to capitalise on yesterday’s super surge.11.47am GMTTrading volumes in the City are exceptionally light.Just 73 million shares have changed hands so far - compared to an average of 588 million over the last few days. You’d almost think investors were busy getting ready for Christmas....Is there literally anyone left out there trading?11.43am GMTRaindrops are now slouching their way down the windows of City offices, helping to dampen festive spirits among traders who made the trip into work.European markets are generally under a cloud too, with the Stoxx 600 index (which tracks the 600 biggest companies in Europe) now down 0.2%.11.31am GMTRather like a festive reveller*, the London stock market is stumbling as it enters the final lap before Christmas.The FTSE 100 is now up a measly 1 point, with one hour to go until the early Christmas finish. And oil’s early rally is fizzling out too....11.23am GMT11.13am GMTRather like the Ghost of Christmas Past, former Greek finance minister Yanis Varoufakis has made a festive appearance.....and dished out some rather unfestive comments.“It was a pure coup, one big coup. And that has succeededHe’s the puppet master who pulls all the strings. All the other ministers are marionettes. Schäuble is the grandmaster of the Eurogroup. He decides who becomes the president, he determines the agenda, he controls everything.”He can’t make any decisions without calling Schäuble.”Varoufakis makes sure no Xmas cards will be exchanged with some of his ex #euro group colleagues https://t.co/FHMxPFQQ37 #Greece10.17am GMTAnd lo, there appeared some economic news....

When Syriza won nearly half the seats in Greece’s January elections, the academic economist won a rockstar following, preaching an alternative to austerityThe year 2015 did not begin – or end – as Yanis Varoufakis might have predicted. This time last year, having finished a busy academic term at the University of Texas in Austin where he was a visiting professor in economics, he had flown to Australia for a holiday. Varoufakis has a teenage daughter with his first wife – the pair now live in Sydney – and he was hoping, as he puts it, “to have a quiet time”. Continue reading...

GDP estimate for third quarter cut from 0.5% to 0.4% after sharp slowdown in services, meaning UK chancellor is unlikely to hit growth forecastsGeorge Osborne has received a second pre-Christmas setback after official figures showing a a stuttering performance by the economy in the months following the general election put the government’s 2015 growth forecast at risk.Following much worse than expected borrowing figures on Tuesday, the Office for National Statistics pared back its estimate for gross domestic product in the third quarter of the year - and said activity had also been weaker in the previous three months.Related: UK economy weaker than expected - liveRelated: Latest borrowing figures threaten Osborne's deficit target Continue reading...

Analysts believe growth figures of 0.4% mean no interest rate rise until well into 20162.38pm GMTTaking its lead from markets elsewhere, Wall Street has opened sharply higher as commodity prices - oil in particular - gained ground.The Dow Jones Industrial Average is up 133 points or 0.7% in early trading, while the S&P 500 is up 0.37% and Nasdaq is 0.49% better.2.20pm GMTBack with the UK GDP figures, and here is economics correspondent Phillip Inman’s analysis of what the data means for the chancellor:George Osborne’s year has ended with a bump. Like a Strictly Come Dancing finalist drunk on high marks for his paso doble and tango, he has come unstuck on the last foxtrot.Official growth figures have been downgraded for the third quarter, undermining boasts that the UK was marching hand in hand with the US as one of the best-performing economies in the western world.A series of revisions by the Office for Budget Responsibility had upgraded the UK’s growth forecasts while maintaining the steady path of deficit reduction. With the economy expanding at a rate our European neighbours could only dream of, and the annual deficit predicted to reach zero by the end of the parliament, Osborne’s chances of becoming the next prime minister seemed on track.Now that the Office for National Statistics has told us that growth in the third quarter was lower than previously forecast, the rate for the whole year is likely to be around 2.2%, compared to 2.9% in 2014.Related: George Osborne's economic year ends with a bump1.43pm GMTBusiness investment in the US slowed last month as orders for capital goods (excluding defence and aircraft) fell 0.4%, more than double the decline expected.This compares to a rise of 0.6% in October, itself down from an initial reading of a 1.3% increase.1.23pm GMTGreece has received €1bn from the EU bailout fund, the European Stability Mechanism after completing a second set of reform milestones.The money will be used for debt service, budget financing and co-financing projects funded by EU structural funds. The ESM has also handed over €5.4bn for bank recapitalistation. In a statement the ESM said:ESM Managing Director Klaus Regling said: “With the disbursement of €1 billion, the ESM is supporting the Greek government in its reform process. The reforms cover a wide array of policy fields that are important to modernise the Greek economy. Notable examples include measures to stimulate competition in the energy sector, which should bring down prices, as well as a new law to help banks manage their exposure to non-performing assets, which will free liquidity and boost economic activity.Mr Regling added: “I hope the good cooperation with our Greek partners will continue, so that the first review of the ESM programme can be completed in early 2016. Only a successful conclusion of this review can lead to discussions on further debt relief for Greece, as the Eurogroup has said before.”1.20pm GMTDespite the weak GDP figures, a rate rise from the Bank of England is still expected next year, even if not in the immediate future. Calum Bennie, savings expert at Scottish Friendly said:Growth may be fragile but it is continuing and so attention will turn to an interest rate rise at some point in 2016. This is yet another sign that the party could be over for cheap borrowing. The guests may still be in the room but the music has stopped and with interest rate rises on the horizon borrowers have to prepare now for the very real possibility of larger debt repayments in 2016. People need to turn their attention to putting money aside to reduce any risks to their financial future as there is a degree of uncertainty ahead.12.28pm GMTHere’s our take on the UK GDP figures by economics editor Larry Elliott:The chances of the government hitting its growth forecast for 2015 has receded after official figures showed the economy performing less well than originally thought in the first three-quarters of the year.In a second pre-Christmas setback for George Osborne, the Office for National Statistics on Wednesday cut its estimates for expansion in both the second and third quarters.Related: More pain for George Osborne as ONS cuts UK economic growth11.46am GMTUK productivity, measured by output per hour, grew by 0.5% from the second to third quarter. The ONS said this was the highest level recorded for the series, but since it only began in 2008, it is 13% below a trend extrapolated before the financial downturn in that year.11.23am GMTBetter news for the UK government, with the current account deficit stable at £17.5bn in the third quarter compared to expectations of a figure of £21.5bn.That accounts for 3.7% of GDP and is down from the peak figure of £28.5bn in the fourth quarter of last year. IHS Global Insight economist Howard Archer said:The UK current account deficit was unexpectedly stable in the third quarter at the lowest level since the third quarter of 2013 as a reduced shortfall in investment income countered a renewed widening in the total trade deficit.It is of some relief that the UK current account deficit was stable at a reduced level in the third quarter. While the markets have so far taken a relatively relaxed view of the UK’s elevated current account deficit, it could become an increasing problem if the markets lose confidence in the UK economy for any reason.11.16am GMTThe GDP figures show the problem of the UK economy relying on domestic demand, says economist Nina Skero at the Centre for Economics and Business Research:Today’s release only adds fuel to the existing concerns that economic growth is overly reliant on household consumption. Given continued subdued performance in key markets and the relative strength of sterling (which may get even stronger as interest rates begin to rise), boosting trade prospects will require constant government encouragement. Programmes such as Exporting is Great, which offer advice and access to export opportunities for firms, are a step in the right direction. We still expect relatively robust GDP growth of 2.0% in 2016, but much of this relies on the boost to consumption arising from low inflation and higher wages. While this is fine in the short term, it is not sustainable formula for economic growth in the long run.11.10am GMTMore from the UK GDP report.First, the dominance of the service sector:10.59am GMTBack with the UK GDP figures and David Kern, British Chambers of Commerce chief economist said:It is not hugely surprising to see GDP growth downgraded slightly, as it is in line with the revisions in our own forecast earlier this month. However it is concerning that it weaker growth in our dominant services sector has played a part.Given the slump in our manufacturing sector, our services sector will still be expected to drive economic growth as we enter 2016.10.42am GMTOn the oil price, Opec assumes it will average $55 a barrel during 2015 (at the moment Brent crude is $36.48) and will reach $70 (in 2014 prices) by 2020 and $95 by 2040:[This reflects] a gradual improvement in market conditions as growing demand and slower than previously expected non-Opec supply growth eliminate the existing oversupply and lead to a more balanced market. This, in turn, will provide support to prices.10.35am GMTOpec also predicts that $10trn of investment is needed by 2040 to cover future needs:The increase in the overall requirement for OPEC crude between 2015 and 2040 is almost 10 mb/d, while for non-OPEC liquids it is just over 3 mb/d.It all means that investments remain huge. Oil-related investment requirements are estimated to be around $10 trillion between now and 2040. In the current market environment what this underlines is the delicate balance between prices, the cost of the marginal barrel and future supplies.10.26am GMTDemand for Opec’s crude oil will be lower in 2020 than next year, with supply from rivals proving stronger than expected, according to the oil producing organistation’s latest outlook report.The prediction raises questions about how successful Opec’s strategy of not cutting production to keep crude prices low has been at hurting other producers. Reuters reports:Opec... which a year ago refused to cut supply to retain market share against higher-cost rivals, in its 2015 World Oil Outlook raised its global supply forecasts for tight oil, which includes shale, despite a collapse in prices.Demand for Opec crude will reach 30.70 million barrels per day (bpd) in 2020, OPEC said, lower than 30.90 million bpd next year. The expected demand from OPEC in 2020 is about 1 million bpd less than it is currently producing.Oil has more than halved its price in 18 months [which] has helped to boost oil’s medium-term use, although OPEC said the demand stimulus of low crude prices will fade over time.“The impact of the recent oil price decline on demand is most visible in the short term,” Opec Secretary-General Abdullah al-Badri wrote in the foreword to the report. “It then drops away over the medium term.”10.11am GMTThe UK’s economy is now expected to grow by 2.2% in 2015, rather than 2.4%, according to IHS Global Insight economist Howard Archer. In the wake of the disappointing third quarter GDP figures and the lower numbers for the previous quarter, he said:GDP growth was disappointingly revised down to 0.4% quarter-on-quarter and 2.1% year-on-year from the previously reported 0.5% quarter-on-quarter and 2.3% year-on-year. In addition, second quarter GDP growth was revised down to 0.5% quarter-on-quarter from 0.7% quarter-on-quarter.Growth was held back in the third quarter by net trade which knocked 1.0 percentage points off growth. This fuels concern that UK growth is far too reliant on domestic demand, even allowing for the fact that the third quarter trade performance was partly a payback for a strong second quarter.10.00am GMTThe UK Treasury is of course putting a brave face on the disappointing GDP figures, reminding everyone that the IMF praised the UK economy but warning that risks remain:Read our spokesperson quote in response to today’s @ONS quarterly national accounts release #GDP pic.twitter.com/lYHtAbYueg9.56am GMTHowever, GDP growth per head is now back above the level seen during the financial crisis in 2008:Nearly 8 years later, UK GDP per head is finally back above pre-crisis levels. pic.twitter.com/dpijCNN2l19.47am GMTThe weaker than expected UK GDP figures come a day after disappointing borrowing data of course:Related: Latest borrowing figures threaten Osborne's deficit target9.44am GMTUK GDP growth of 2.1% in Q3 was the lowest in 2 years, below every forecast from 30 economists polled by Reuters. pic.twitter.com/KLs2Vw4fN09.40am GMTHere is a chart from the ONS showing the breakdown of GDP, and the changes between this reading and the last:9.36am GMTWeaker growth in the service sector was behind the lower growth figure, according to the Office for National Statistics.As well as third quarter growth being revised downwards, annual growth was also cut from the previous reading of 2.3% to 2.1%.9.31am GMTBreaking news:The UK economy grew less strongly than previously thought in the third quarter, up 0.4% compared to initial estimates of 0.5%.9.10am GMTHere’s our report on Game Digital from Sean Farrell:Game Digital shares plunged after the retailer warned that profit would fall sharply after sales of games since the start of the Christmas holidays were worse than expected.The seller of video games and consoles said UK sales for the 21 weeks to 19 December fell 11.4% to £353.4m as gamers failed to buy enough games for new consoles to make up for a steep fall in demand for older formats.Related: Game shares fall 40% after profit warning8.40am GMTMore on the French economy:Sharp drop in #French consumer goods spending in Nov. suggests total household spending will be a drag on GDP in Q4. pic.twitter.com/u3SeOgIXix8.28am GMTMining shares are among the gainers in London, points out Tony Cross, market analyst at Trustnet Direct. He said:London’s FTSE-100 has surged higher at the open with thin volumes ahead of the Christmas break arguably exaggerating the move. Hopes that Chinese stimulus measures could buoy the fortunes of natural resources stocks, combined with some elements of a short squeeze, have driven miners to the top of the board. These gains may well look a little more sustainable after iron ore prices rose in Australian trade.8.11am GMTEuropean stock markets, as forecast, have made some strong opening gains.The FTSE 100 is up 68 points or 1.1% in early trading, while Germany’s Dax has added 1.2%, France’s Cac and Spain’s Ibex have both climbed 1%, and Italy’s FTSE MIB is 0.8% higher.8.06am GMTCompany tax affairs are in the spotlight at the moment.Amazon and eBay are facing action over VAT, as Simon Bowers reports:Top tax officials are exploring whether Amazon and eBay can be forced to foot the bill for ballooning VAT fraud associated with an army of small overseas sellers who are rapidly coming to dominate sales of many popular items on Britain’s leading shopping websites.Related: Amazon and eBay face crackdown over VAT fraud by overseas sellersRelated: Anger at City banks paying little or no corporation tax8.03am GMTThe French economy grew by 0.3% in the third quarter, confirming earlier readings after showing no growth in the previous three months.Meanwhile French consumer spending fell unexpectedly by 1.1% in November, compared to expectations of a 0.1% increase.French consumer spending on goods disappointingly fell back 1.1% m/m in Nov in blow for Q4 growth hopes. We currently expect 0.2% q/q growth7.52am GMTAnd an early Christmas profit warning. Computer games retailer Game Digital said it had seen challenging trading conditions and disappointing sales since the start of the festive school holidays.So it expected half year profits to come in at £30m. Analysts at Liberum said:UK sales have fallen off sharply in the past few weeks at the most critical time of year for Game. General weakness has been exacerbated by very rapidly slowing sales in old format content, down 57% in the UK, and while sales of new generation content remained strong these were not enough to offset the decline. The Spanish market remains strong with sales up 8%.While a decline in old format sales was expected the scale has surprised the company while the importance of Christmas trading has hugely magnified the issue. We cut our full year earnings per share forecasts by 60%, 2017 estimates by 42% and 2018 by 30%. There is no updated guidance on the dividend, but we note that current year cover is just 0.5 times.7.47am GMTMeanwhile oil prices have edged higher, with Brent crude up 1% to $36.48 a barrel.

With the ONS cutting the UK growth rate and government borrowing now much higher than forecast the chancellor’s star appears to be waningGeorge Osborne’s year has ended with a bump. Like a Strictly Come Dancing finalist drunk on high marks for his paso doble and tango, he has come unstuck on the last foxtrot.Official growth figures have been downgraded for the third quarter, undermining boasts that the UK was marching hand in hand with the US as one of the best-performing economies in the western world.Related: More pain for George Osborne as ONS cuts UK economic growth Continue reading...

Both third quarter and second quarter figures revised down by Office for National StatisticsBritain’s economy grew less strongly than previously thought in much of 2015, according to official data that is likely to surprise the Bank of England as it ponders when to raise interest rates.Related: UK economy weaker than expected - liveRelated: Economy concerns as household debt rises to £40bn in latest figures Continue reading...

Budget deficit 10% higher last month than in November 2014 – although one-off factors such as £1.1bn in bank fines played a partFears were heightened on Tuesday that George Osborne will miss his deficit reduction targets after the latest official figures showed that the government’s budget deficit was 10% higher last month than in November 2014.The City said the chancellor now faced an uphill struggle to cut the deficit to £68.9bn in the 2015-16 financial year after figures for the first eight months showed borrowing already at £66.9bn.Related: The roof is being fixed but beware the house crashing beneath it Continue reading...

UK public sector borrowing rises 10% in November to £14.2bn, putting pressure on chancellor’s full year target2.37pm GMTUS markets have made a bright start to trading following the better than expected third quarter GDP figures.The Dow Jones Industrial Average is currently up around 53 points or 0.3%, helping to support European markets which had been tending to drift a little before the US open.2.11pm GMTFollowing the poor UK public finances figures and the reasonable US GDP numbers - which show why the Federal Reserve was happy to raise US rates - the pound has fallen back.Sterling has fallen to an eight month low of $1.4860, down 0.2% on the day. Against a basket of currencies it is down 0.3% to a ten week low.2.09pm GMTGDP revisions look mildly better after excluding net exports and inventories, but slumping corp. profits serve as reminder to hike slowly.2.09pm GMTUS corporate profits fell by 1.6% in the third quarter, compared to a 3.5% rise in the previous three months.1.44pm GMT1.34pm GMTThe US economy continues to grow at a healthy pace, although by slightly less than first expected.The latest revision to the third quarter figures showed GDP growth of 2% on an annual basis, down from the 2.1% previously reported. But this was better than the 1.9% analysts had expected. Strong consumer and business spending offset attempts by business to reduce inventories.1.18pm GMTEuropean shares are drifting after a bright start.The FTSE 100 is currently 0.75% higher despite worse than expected public finance figures, but Germany’s Dax is virtually unchanged while France’s Cac is up just 0.2%.12.32pm GMT#Turkey Lira weakened after central bank left its benchmark rate on hold at 7.50%, vs consensus of a hike to 8.00%. pic.twitter.com/xBA0Ktpfte12.29pm GMTTurkey’s central bank has kept interest rates unchanged, confounding expectations of an increase in borrowing costs.The overnight rate is held at 7.25% despite forecasts of a 25 basis point increase while the repurchase rate is 7.5% compared to expectations of a rise to 8%.11.22am GMTDespite all the concerns about the Spanish economy following the weekend election and the subsequent uncertainty about the country’s future government, the country’s central bank has raised its growth forecasts for this year and next.The Bank of Spain said it expected the country’s economy to grow by 0.8% in the fourth quarter, the same level as in the previous three months, and it lifted its growth forecast for 2015 from 3.1% to 3.2%. For 2016 it is now predicting growth of 2.8%, up from its previous estimate of 2.7%.Internally the main source of uncertainty is associated with the evolution of economic policies, given how much the reform agenda and budget policies in particular affect confidence.10.58am GMTTata Steel is in discussions to sell its struggling UK businesses to investment group Greybull Capital which could safeguard thousands of jobs.The companies have signed a letter of intent and have entered exclusive talks. The deal involves Tata’s Long Products Europe division, including its Scunthorpe steelworks, mills in Teesside and northern France, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities. It also includes Tata Steel’s Scottish mills in Dalzell and Clydebridge which are currently being mothballed.10.41am GMTGeorge Osborne’s plan to repair Britain’s public finances has received a fresh setback from official figures showing that the budget deficit in November was 10% higher than in the same month in 2014, writes our economics editor Larry Elliott.The Office for National Statistics said the gap between spending and revenues last month was £14.2bn - an increase of £1.3bn on November 2014.Officials said that one reason for the deterioration was that last November had seen the payment of fines by financial institutions totalling £1.1bn, which had not been repeated in November 2015.Related: Latest borrowing figures threaten Osborne's deficit target10.27am GMTEconomist Howard Archer at IHS Global Insight said:If the pattern of the first 8 months of fiscal year 2015/16 continued over the rest of the year, PSNBex would come in at £81.2 billion. This compares with the target of £68.9 billion contained in November’s Autumn Statement.The Chancellor now faces a massive task to meet his fiscal targets for 2015/16 and it is frankly hard to see how he can make it –even allowing for the fact that (1) public finances can be volatile from month to month (partly due to the timing of expenditures) and can be revised significantly; and (2) the OBR argues that there should indeed be a substantial improvement in the public finances over the final months of 2015/16 due to a number of factors. This particularly includes an expected jump in self-assessment tax receipts in January resulting from past policy measures. The OBR also expects spending cuts to have an increasing impact as pressure to meet budget targets mounts on departments subject to Treasury controls10.24am GMTGradual progress but much more needed is the verdict of David Kern, chief economist of the British Chambers of Commerce:Although we saw a minor setback in November, gradual progress is being made with reducing the deficit. The public finances are likely to be better this year than in the previous financial year, but the improvement may not be as large as the OBR suggested in the Autumn Statement.The underlying message remains that our budget deficit is still too high, and greater efforts are needed, through reducing current public spending and generating sufficient tax receipts.10.21am GMTThe UK public finances are not improving as much as hoped, said James Knightly of ING Bank:UK public sector net borrowing (excluding banking groups ) came in at £14.2bn in November versus expectations of £11.8bn. This is actually higher than in November last year (£12.9bn). While we have to acknowledge there does tend to be a lot of volatility in the month to month figures, the cumulative borrowing fiscal year to date suggests that Chancellor Osborne is going to struggle to hit his target. So far, 2015-16 to date borrowing is at £66.9bn, which is only $6.6bn lower than in in the same period of 2014-15. The OBR’s full financial year forecast is £73.5bn [see earlier] but barring a dramatic improvement in the trend, it is looking likely to be missed by possibly more than £5bn.In terms of the breakdown, there have been good improvements in tax revenue with full year to date figures showing a 4.6% increase in income taxes, 4.1% improvement in VAT and a 6.4% increase in corporation tax, which is confirmation of the good growth and employment figures we have seen over the year. Stamp duty collection is disappointing though while fuel, alcohol and vehicle duties have shown little change on the year. Overall, central government receipts are up 3.1% full year to date while government expenditure is up 1.2%. Here, we have seen falling debt interest costs, but net investment is up 8.7%, social benefits are up 1% and department spending is up 1.2%.

The Tories’ failed model and stagnant economy has encouraged an unsustainable rise in household debt. Labour needs to come up with a viable alternativeTis the season to whip out the credit card. As I type, millions of Britons are undoubtedly flooding into shops or splashing out online full of festive panic: set spending habits to Defcon Christmas. So apologies in advance for the Scroogefest, but latest figures confirm Britain’s supposed economic recovery rests on a personal debt timebomb. When it runs out is unclear, but run out it will.Related: Latest borrowing figures threaten Osborne's deficit targetRelated: UK pay rises likely to fade fast, thinktank warns Continue reading...

Finance minister says the budget marks the first step towards Japan’s fiscal plan as it aims for economic revival and a reduction in its debt burdenThe Japanese government is planning nearly £537bn of record spending in the next fiscal year to shore up a fragile economy, with Tokyo also promising to rein in a bulging debt burden in an expansionary budget set to be unveiled this week.Related: Japan 's 'quintuple dip' recession delivers a fresh blow to Abenomics Continue reading...

The Doha round’s promise of better market access for the poorest nations, cuts in farm subsidies and fairer trade rules has come to nothing