Rolling business and financial news, as Athens races to produce a list of reforms to satisfy its lenders by next Monday

Financial policy committee’s quarterly report also identifies eurozone as source of potential instability in stress-test scenarios for banksThe crisis in Greece, a slowdown in China and the eurozone are the main international risks to the financial system, says the Bank of England, which is concerned that markets could suddenly seize up and a pose a threat tostability.As the Bank’s financial policy committee – established to monitor risks in the system and chaired by bank governor Mark Carney - published its quarterly update on its assessment of the markets, it said that the annual stress tests on banks would focus on such international risks. Continue reading...

Government reduces Lloyds stake to 22% bringing total recouped from bailed-out bank to £9bnThe government has made another £500m from selling part of its stake in bailed-out Lloyds Banking Group.The selloff reduces the government share of the group from 23% to just under 22%.We have raised a further £500m through Lloyds share sales. £9bn now recovered & being used to pay down our national debt Continue reading...

Three members of monetary policy committee give statements suggesting they see no sign of underlying deflationary pressure

Pre-election pledges not to introduce major increases in VAT, national insurance and income tax after the election could cause problems if economy slows down

Rolling economic and financial news, including the latest developments around Greece’s bailout and the annual Independence Day parade

Prime minister echoes Labour’s promise to keep VAT at current level, but Tories’ plans would bring deep cuts in public spendingDavid Cameron wrongfooted Ed Miliband at their final prime minister’s question time encounter on Wednesday by echoing Labour’s headline-grabbing pledge not to increase VAT.As set out in last week’s budget, the Tories’ fiscal plans do not include tax rises. But they do require painfully deep cuts in public spending, of more than 5% each year, which the Institute for Fiscal Studies pointed out are “twice the size of any year’s cuts over this parliament”.

People seem to think there are simple answers to complex problems. Even politicians could learn a thing or two from revisiting the basics

A far more fundamental revolution in economic thought is needed than the new theory of capitalism that Paul Mason calls for (To move beyond boom and bust, we need a new theory of capitalism, G2, 23 March). Ever since Adam Smith, economics has been pursued as a science, as a discipline that seeks to improve knowledge about economic phenomena. But at the heart of the enterprise there is a problem of living, having to do with the creation and distribution of wealth – or, better, the sustainable creation and just distribution of wealth. Granted that the task of economics is to improve our attempts at solving this basic, real-life problem, economics needs to give intellectual priority not to theory or the pursuit of knowledge but to (a) getting clearer what our economic problems are, and (b) proposing and critically assessing policies designed to help solve them. Economics ought not to be thought of as a science at all. Rather, its proper, fundamental task is to invent and critically assess policies from the standpoint of their capacity, if implemented, to help solve our real-life economic problems.

0% inflation will ease the squeeze for households. But it’s also trapping workers on low payZero. Zilch. Nada. Even those sent to sleep by bulletins from the Office for National Statistics will surely have been struck by the news that the consumer price index has fallen to 0%. Not only has this never happened before, no term exists to describe this situation. Inflation refers to rising prices; deflation, falling prices. The new nullity could perhaps be christened flation.Whatever the name, the government would have you believe it’s a good thing. “The right sort of price freeze,” according to Treasury chief secretary Danny Alexander. And provided it doesn’t last long, they’re right. The halving of oil prices over the past year and the resulting fall in the cost of transport and food is good news for most Britons. It also comes in very handy for coalition ministers, who can deflect Ed Miliband’s jabs about living standards. Even if wages are only crawling upwards, a fall in prices leaves more cash in voters’ pockets. A foretaste of this tactic was served up by George Osborne in last week’s budget, in which he boasted that “living standards will be higher in 2015 than in 2010”. This supposed triumph is more rhetorical than real – and it surely won’t resonate in the average household. But still, all’s fair in love and election campaigns. Continue reading...

Finance minister Natalie Jaresko wants to see debt cut and interest on remainder reduced so Ukraine can move towards stabilityUkraine could be forced into a damaging default unless talks to restructure its debts are concluded successfully and speedily, the country’s finance minister warned on Tuesday.Natalie Jaresko said all her country’s creditors were aware of the critical nature of the negotiations designed to help stabilise an economy crippled by recession, corruption, mismanagement, and war. Continue reading...

George Papaconstantinou receives one-year suspended sentence after judges rules he tampered with the Lagarde List of suspected tax evaders

Promise comes as German foreign minister declares ties between Berlin and Athens have improvedGreece has pledged to pull together a comprehensive list of reforms by the start of next week, in an attempt to unlock fresh funds before Athens runs out of cash in April.Government spokesman Gabriel Sakellaridis said on Tuesday that the programme demanded by Greece’s increasingly impatient creditors would be finished within days.

Falls in food and fuel prices means consumer prices index - UK’s official inflation measure - has not been so low since comparable records began in 1989Inflation has fallen to zero for the first time on record in Britain, boosting incomes in real terms and handing the chancellor a pre-election advantage.The consumer prices index dropped in February from 0.3% in January, bringing the UK to the brink of a spell of deflation that is expected in the coming months.Related: Inflation falls to 0%: what does it mean for the UK economy?Inflation is running at 0% - the lowest on record. It's good news for family budgets and a sign our long term plan is working. Continue reading...

Deflation is good for pensioners and people with cash in the bank but those losing out include anyone with debts

Latest spell of weak price pressures in the UK has triggered a division of opinion at the very top of the Bank of England, which targets inflation at 2%Inflation is expected to fall to a fresh record low of just 0.1% when figures are released today, as Britain heads for a period of deflation.A fall in the consumer prices index in February from 0.3% in January would provide a further boost for households already benefiting from falling fuel and food prices. Continue reading...

Mass immigration has boosted Britain’s economy but cut the earning power of those at the bottomMass immigration increases inequality. This is the unpalatable fact the liberal left in Britain refuses to accept. Markets are imperfect instruments. But it is not necessary to subscribe to free market economic theory to believe that large increases in supply tend to drive down the price. And the price of labour is the wage.Last Friday, the Guardian front page carried a report from the Office for Budget Responsibility, claiming that higher net immigration increased the UK’s economic growth rate. According to the mainstream theory of economic growth, this is undoubtedly true. Higher growth can be created by sustained increases of either capital or labour.Related: Immigration: let’s change the way we talk about it | Jonathan FreedlandA modern economy relies on innovation. This should be the focus of policy Continue reading...

Report by joint committee on human rights says worst suffering has been inflicted on children from migrant and low-income families

In what we hope was his last budget, George Osborne made a series of false claims about his economic record (Editorial, 20 March). The reality is that his priority is to raise profits for the corporations, top executive salaries and bonuses, at the expense of ordinary working people. His achievement is the slowest ever “recovery” from recession, while ordinary people suffer increasing hardship during the longest continuous fall in living standards since records began. That is the real Tory record of this parliament. All those who have seen their real wages fall understand the real effects of austerity policies, along with people forced into low-paid or zero-hours contracts, families forced into using food banks and everyone suffering rising A&E waiting lists. Austerity policies have not reduced the public-sector deficit to the level its supporters claimed. The limited fall in the deficit is a result of hugely damaging cuts to government investment as well as the windfall of falling global interest rates, which are a sign of economic weakness.Austerity policies have failed everyone but the super-rich, bankers and landlords who have benefited from the government’s tax cuts, bonuses and measures to boost house prices, but not home building. We call for an end to austerity policies. We need to invest in a future for the majority of the population. That’s why we’ll be supporting the People’s Assembly Against Austerity national demonstration and festival against austerity on Saturday 20 June. Continue reading...

Greek prime minister has held talks with the German chancellor in Berlin, as pressure grows to meet its creditors’ demands.

The commodification of our lives is creating a time-poor society that damages our happiness and our planet, and will ultimately harm our economy tooWhat are the building blocks of a post-growth politics? And how can we get from here to there?A crucial part of the answer is that we need a deep reframing of the central questions of politics. In the first place, we should talk less about the economy as a machine for producing more goods (many of which turn out to be “bads”). We should talk more about what an economy is actually for: satisfying needs, creating a better society and improving our quality of life. Once we do that we see that continuing growth can be counter-productive, as well as impossible in a finite system such as the planet we live on.Related: Growth is not the answer to inequalityRelated: A wave of disruption is sweeping in to challenge neoliberalism Continue reading...

CBI industrial trends survey is the latest piece of evidence to suggest that the economy is growing less quickly than in the second half of 2014Order books for UK factories have stagnated as the strong pound and the protracted weakness of the eurozone affect demand for British goods overseas.The CBI said in its monthly health check of industry that export order books stood at their lowest in more than two years following a sharp fall in March. Continue reading...

Open Europe thinktank warns Ukip that Britain could lose 2.23% of its GDP by leaving the EU customs union and single marketBritain faces a stark choice after an EU exit of allowing its economy to shrink by £56bn, by shutting down its borders, or agreeing to the continued free movement of European citizens in a new deal with Brussels, according to a leading thinktank.In a challenge to Nigel Farage, who believes Britain can prosper outside the EU by blocking migration, the Open Europe thinktank warns that a unilateral UK exit could lead to a permanent dent in the country’s GDP of 2.23% by 2030. This works out at £56bn a year. Continue reading...

Report warns that people’s complacency over their ability to manage their borrowing could lead to resurgence in bad debtThe average UK household will owe close to £10,000 in debts such as personal loans, credit cards and overdrafts by the end of 2016, which is a new high in cash terms, a report has found.Total outstanding non-mortgage borrowing grew by nearly £20bn or 9% in 2014, to reach £239bn, marking the fastest rate of growth in a decade, according to the report from PwC, Precious Plastic: How Britons Fell Back in Love With Borrowing. Continue reading...

Alexis Tsipras and Angela Merkel are to meet in Berlin for high-stakes talks that could prove to be decisive in the battle over austerity measuresWhen the red carpet is rolled out for Alexis Tsipras in Berlin on Monday, the euro debt drama will come to a potentially decisive turning point.His host will be none other than Angela Merkel, Europe’s mother, its powerbroker par excellence and the queen of austerity, defender of the very policies the leftwing firebrand has vowed to dismantle. For many, it will be the long anticipated moment of truth. Continue reading...

Amid demands for wartime compensation from Athens, and for deep economic reforms from Berlin, a majority of Germans now want Greece out of the eurozone

Analysts expect inflation is likely to have fallen to 0.1% with some predicting that figures could show a negative readingThe British economy is heading for a spell of deflation as official figures are expected to show that inflation dropped to 0.1% last month.Analysts expect the UK’s consumer price inflation (CPI) figure for February, which is released on Tuesday, to fall from 0.3% in January, driven by lower energy and food prices. Some economists think the monthly update from the Office for National Statistics could already show deflation. Continue reading...

For Britain’s industrial areas, recovery is patchier, with weaker jobs growth and less infrastructure spending. The evidence says we never have been in it togetherHartlepool has seen better days. Its port was used to transport coal from the Durham coalfields and manufacturing thrived on the Tees estuary.Heavy industry is still important, although there is less than there was. The council has ambitious plans for regeneration. On the waterfront, there is evidence of previous attempts to turn the town’s fortunes around. The empty office blocks and the shuttered outlet centre show these have not been entirely successful. Continue reading...

IMF and Asian Development Bank tell Beijing conference they are happy to cooperate with Asian Infrastructure Investment Bank, but US urges caution

The chancellor’s boastfulness and trickery have not saved him from the criticism of the independent economic watchdogs that he himself set upI keep wondering who George Osborne reminds me of, and it finally came to me, during what I hope – in common, I imagine, with tens of millions of British citizens – will prove to have been his last budget speech.During the austerity years of 1945-51, there was no shortage of demand, but a severe shortage of supply. Also, the country was broke, and there was, to coin a phrase, no alternative to austerity, of which the most obvious manifestation was rationing.Osborne cannot get away from the fact that he has presided over the slowest and feeblest recovery in living memory Continue reading...

Rolling economic and financial news, as European leaders urge Athens to present details reform plans quickly

UK index of top 100 companies surpasses 7,000, recording its all-time high since the index was introduced in January 1984The FTSE 100 has soared through the 7,000 barrier for the first time in its history, with investors buoyed by the prospect of continuing low interest rates and growing hopes that a solution may finally be found to Greece’s financial crisis.Seventeen years after the leading index hit 6,000, it finally added the next 1,000 points after a number of attempts, notably in 1999 at the height of the dotcom boom. Last year there were predictions that the index would reach new peaks, but after coming close a number of times, it always fell at the final hurdle as new risks – ebola, the Ukraine crisis, the eurozone – emerged. But on Friday, it closed 60.19 points higher at a record 7,022.51, a near-1% rise on the day. Continue reading...

Newcastle’s collaborative, ‘future thinking’ regeneration scheme has revived a city that was on its knees after the devastation of 1980s deindustrialisation. But what about near-neighbour Sunderland? Compare its fortunes hereIt comes as no surprise to the Geordies that Newcastle is rated one the UK’s best performing cities. I left in 1990 when the city (and most of the north-east) was on its knees, but the city I see on my visits home is revived, emerging as a poster child for the new north. A recent Centre for Cities report ranked Newcastle eighth among the UK’s largest cities in terms of jobs growth – attracting nearly 30,000 new jobs between 2004 and 2013 (an 8% increase), and belying the report’s overall message of a widening north-south divide.The revived Quayside is testament to the city’s determination to rebuild itself after the devastation of 1980s deindustrialisation. Building on the work of neighbouring Gateshead in promoting its Garden Festival, Sage culture centre and Millennium Bridge, Newcastle published Going for Growth, an ambitious, city-wide regeneration strategy, back in 2000. Seeking to position itself as a competitive, cohesive and cosmopolitan city of international significance, it built partnerships with citizens, communities, companies and government – and even bid to become European City of Culture, achieving a level of exposure overseas despite losing out to Liverpool.To many north-easterners, this part of the world has been ignored for so long that self-reliance is bred into the psycheRelated: City rivalries: Sunderland's reinvention is profound – but its recovery is fragile Continue reading...

Thinktank says chancellor must specify how he will reach targets announced in the budget, given that the poor had been hardest hit by benefit changesGeorge Osborne is under pressure from the Institute for Fiscal Studies to specify how he planned to cut welfare spending by £12bn in the next parliament, and warned the poor had lost most from the coalition’s benefit changes of the past five years.Britain’s leading experts on tax and spending also said the pickup in living standards hailed by the chancellor in his budget was the slowest in modern history and “no cause for celebration” – although the IFS did suggest living standards on current projections would be higher in 2015 than 2010, a finding that was hailed by Osborne.Related: Budget 2015: beneath George Osborne’s performance was a party on the defensive | Jonathan FreedlandRelated: Osborne will need unprecedented cuts in welfare to meet targets, says IFS Continue reading...

Greece has agreed to present a new list of reforms plan quickly, after top-level overnight talks in Brussels

In the medium-term, Next has nothing to worry about – even if the bottom of Wolfson’s profits range for the current year is £785m, or almost no growthNext shareholders should not despair: their chief executive, Lord Wolfson, may be “very cautious” about the year ahead but that represents only a modest downgrade on his normal mood in March.This time last year, he thought Next’s pre-tax profits would be £730m-£770m. In the event, Wolfson unveiled £782m on Thursday – and that was achieved even with a mild weather-related warning last autumn. Continue reading...

In his budget speech (Report, 19 March) the chancellor, George Osborne, forgot to mention the following eight factors: missed target to eliminate the deficit by end of this parliament; larger debt in the government’s five years than Labour accrued over 13 years in office; tax breaks for millionaires and hedge funds; a million people using food banks; 59% rise in working people forced to claim housing benefit; 1.4 million people on zero-hours contracts; record numbers of people living in poverty; and another £60bn in cuts still to be found before 2020. All seemed to have slipped George’s memory.

Housing benefit and pensions are likely to keep rising, as will tax credits. As the Institute for Fiscal Studies says, it’s time we knew where the cuts will fallAny challenge from the Institute for Fiscal Studies is a hard one for George Osborne to dodge.The tax-and-spending watchdog wants him to explain how he plans to cut welfare spending in the next parliament. Continue reading...