The 20th anniversary of the Srebrenica massacre, the austerity crisis in Greece, the Tour de France – the best photography in news, culture and sport from around the world this week Continue reading...

Despite a big parliamentary vote in favour of a deal with its creditors, Greece could be cut loose if it fails to win over EU leaders at a weekend of summits

Athens has submitted a package of tough spending cuts and tax rises in an attempt to reach a €53.5bn bailout and avoid Grexit.

Debt restructuring has always been our aim in negotiations – but for some eurozone leaders Grexit is the goalGreece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.Europe did not know how to respond to the financial crisis. Should it prepare for an expulsion (Grexit) or a federation? Continue reading...

The chancellor’s budget was not about caring for the poor but wooing those who like to think they carePerhaps it’s unwise to admit it, but one of the challenges during a budget speech is to stop your mind from wandering. Even an address of astonishing political audacity – as George Osborne’s was – has its longueurs, its moments when the stats are coming in such a blizzard, the borrowing projections merging with the annual growth percentages, that the brain, briefly blinded, looks elsewhere.On Wednesday, mine wandered to Philadelphia. Not the city itself, but rather the Republican national convention held there in 2000. They gathered to anoint George W Bush as their nominee and laid on a spectacle that had one striking feature. Though only 4% of the delegates in the hall were black, one headline speaker after another was either African-American or from some other identifiable minority.Related: George Osborne took 'much more from the poor' in budgetOsborne has co-opted a halo brand that is not his – the living wage Continue reading...

Social Democrats mostly support Alexis Tsipras’s latest plan, but the chancellor faces mutiny within her own conservative ranks over a third bailout for GreeceGermany’s ruling coalition appears to be deeply split over Greece’s latest reform proposals ahead of a climactic meeting of EU leaders at the weekend.While senior Social Democrats (SPD), the junior partners in Chancellor Angela Merkel’s government, welcomed the list of concessions from the Greek prime minister, Alexis Tsipras, members of her own conservative bloc were scathing about Greece’s position.Related: Eurozone crisis: Greek austerity plans meet warm but cautious responseRelated: Tsipras rattled his sabre until it was blunt – and for what?Related: Greek debt crisis: What's in the proposals from Athens? Continue reading...

On the subdued streets of Athens, Greeks accept that their PM Alexis Tsipras had little choice but to make €13bn offering to creditorsGreeks who turned out in their millions to reject austerity last week seemed more resigned than angry on Friday about the government’s punishing last-minute offer to its creditors of €13bn of cuts and savings.Related: Greek debt crisis: Tsipras urges MPs to back bailout plan - liveRelated: Greeks facing day of judgment in struggle to stay in eurozone Continue reading...

As share prices rebound to record best two days since 2008, there is debate among analysts about whether the government’s action was too heavy handedAs the east coast of China was put on high alert for the approach of super-typhoon Chan-hom, it was not clear whether the financial storm that has rocked the country’s stock markets had blown itself out.Share prices rebounded to record their best two days since 2008, but many individual investors would still have been nursing big losses after the Shanghai Composite Index plunged nearly a third since its mid-June peak.It is a running joke that no one starts their real job until 3pm, when the markets closeRelated: Why is China's stock market in crisis? Continue reading...

Americans already work more than our European counterparts, but the former governor wants to enact policies to force people to work even more hoursRelated: Jeb Bush says Americans ‘need to work longer hours’ to earn moreFormer governor Jeb Bush’s announcement this week that he thinks people should work more hours puts him in direct opposition to the two leading contenders on the Democratic side – both of whom are pushing proposals that will allow people to work less. This could mean that 2016 will be an election in which work hours play a central role.

After five months of negotiations, and a dramatic referendum rejecting the demands of the country’s creditors in the EU institutions and the IMF, the Greek government has produced a set of proposals with which it hopes to find agreement in Brussels. We look at where they differ from the point at which negotiations were abandoned nearly a fortnight ago Continue reading...

Our current 20% tax rate is the lowest of the G7 countries. The money would be better spent on preserving public services that benefit citizens and businessWednesday’s budget in some ways typifies the tensions between corporate welfare and social welfare. Tax credits are a good example of a provision that falls into the categories of both corporate welfare (in that they act as a wage subsidy for employers) but also social welfare (in that they provide essential support to low-income families).Increasing wages at the lower end is good for low-paid workers, and it has the advantage of reducing the cost of in-work benefits and, potentially bringing in higher tax revenues. But it’s also likely to force up the cost of the wages bill for employers. Thus employers and employees alike are likely to lose out in the short term. As the Institute for Fiscal Studies showed yesterday, the new “living wage” will fail to compensate low-income workers from the cut in tax credits. Those who face the biggest barriers to work – the sick and disabled, and those with more than two children – exactly the types of families for whom wage supplements were originally devised, are set to be the biggest losers. Continue reading...

Finance ministers receptive to package laid out by Alexis Tsipras, who faces greater challenge in getting MPs in Greece to back his proposalsEurozone finance ministers are poised to offer their tentative backing for Greek bailout proposals, after Athens caved in to creditor demands for further austerity measures in return for the promise of limited debt relief.

Five months of brinkmanship has caused untold damage to the Greek economy for no purpose whatsoeverPart tragedy. Part farce. No happy ending. The final stages of the Greek drama have begun.The tragedy is that there is no end in sight to the suffering of the Greek people. They have seen their country’s economy shrink by 25% in five years and it was already back in recession when the banks closed their doors two weeks ago. Continue reading...

Acquiescing to the troika template of austerity has resigned the Celtic Tiger to long-term damage to the economy and to repeat mistakes. Athens take noteThroughout Europe, Ireland is held up as an example for Greece: we took the pain, engaged with the troika, and worked our way out of crisis to become the fastest growing economy … or so the story goes.This myth, however, is based on much that is misunderstood and more that isn’t mentioned. It’s true that Ireland’s relationship with the troika was not contentious – for good reasons. When the troika came to Ireland, they did not have to impose a programme, hand down edicts or enforce decrees. The government had been pursuing a troika-like programme for more than two years before the three institutions – EU, IMF and ECB – arrived in December 2010.Ireland is not only not a model for Greece and other European countries; it shouldn’t even be a model for itself Continue reading...

Alexis Tsipras firmly believes the EU would not dare let Greece go. But is the prime minister right about his country’s strategic importance?The arrival in a week of more than 9,000 refugees in the Greek islands highlights the fact that Greece’s euro drama is being played out in a turbulent neighbourhood. “I have no doubt this will affect Europe, also in a geopolitical sense,” Donald Tusk, the president of the European council, told the European parliament this week.But how? Continue reading...

Prime minister Alexis Tsipras has submitted proposals to European creditors for €13bn worth of cuts that include rises in taxes and pension ageStock markets have raced ahead across Europe amid renewed hopes that a deal can be reached to save Greece from crashing out of the eurozone.The Greek prime minister, Alexis Tsipras, has submitted proposals for a harsh new round of austerity measures totalling €13bn (£9.35bn) in an attempt to break the deadlock over its bailout and is now seeking the backing of parliament in Athens.Related: Greek crisis: Markets surge after Athens submits reform plan - live Continue reading...

The measures drawn up by Alexis Tsipras and his cabinet to help broker a dealRelated: Greek crisis: Alexis Tsipras urges MPs to back bailout plan - live updatesRelated: Greece's euro drama: geopolitical concerns may have already played a role Continue reading...

European council president Donald Tusk has backed calls for Greece’s debt sustainability to be tackled as part of a third bailoutRead our latest live blog on the Greek debt crisis12.15am BSTSo to recap, Greece has put forward a plan of reforms, spending cuts and tax rises that is close to what was demanded by its creditors before Alexis Tsipras called last Sunday’s referendum.The plan includes sweeping chnages to VAT to raise a full 1 percent of GDP, moving more items to the 23% top rate of tax, including restaurants - a key battleground before.11.44pm BSTThe Greek proposal doesn’t appear to cover debt relief. But apparently, Athens has also released one of its ‘non-papers’ to the media, explaining that they are also seeking “regulation’ of debt” and the €35bn investment package promised by Jean-Claude Juncker.@SpiegelPeter Gov nonpaper accompanying prior actions sez request to ESM incl ‘regulation’ of debt + €35-bn ‘frontloaded investment package'11.09pm BSTThis - http://t.co/GKzYq0g4Zk - looks v similar to the 26th June draft plan. The one voted down in the referendum.Basically: Syriza get presented with 26th June plan, call referendum, win referendum, Creditors hit back with "deal or Grexit", Greeks fold.11.08pm BSTA round of applause for Greek newspaper Naftemporiki, who has uploaded the full proposal:11.05pm BSTIt does appear that Greece has, errr, compromised rather substantially:New #Greece proposal appears to meet creditor demands for phasing out pension system's "solidarity grant" by 2019With a quick read, new #Greece proposal appears to move closer to creditors on VAT & pension reforms. But was pre-June 30 creditor position11.03pm BSTHot out of Brussels, the Greek proposal is starting to leak.And it shows that Greece is promising to hit the surplus targets demanded by its creditors, after months of resistanceGot copy of new #Greece proposal. Maintains primary surpluses at 1%, 2%, 3% & 3.5%, though 1st 3 years in parenthesesBREAKING: Greece offers sweeping sales tax hikes, pension cuts in new proposals to creditors.* Greek reforms proposal to raise corporate tax in 2015 - RTRS* Greek reforms proposal to increase tax on shipping companies - RTRS* Greek reforms proposal to increase luxury tax and implement tax on TV adverts immediately - RTRS* Greek reforms proposal ekas benefit to be gradually phased out for all pensioners by end December 2019 - RTRS10.28pm BSTAnd finally (probably), the first reactions are already coming in from outraged leftists following news of the new measures, says Helena.The communist party has called on supporters to attend a mass rally in Omonia Square at 7pm (5pm BST) on Friday to protest “the barbaric memorandum.”“Let’s say NO to the barbaric memorandum.”10.09pm BSTPanic over! A signed copy of the Greek proposal has landed in Brussels.Now received. Signed. Three institutions will now assess. #withJuncker10.00pm BSTSo what happens now? Over to Athens.....Our correspondent Helena Smith has confirmed that the proposed reforms have indeed been sent to the country’s creditors - and three hours AHEAD of the midnight deadline central European time.9.40pm BSTAh, there may be a hitch...Signed letters are needed.9.30pm BSTEurogroup president Dijsselbloem’s spokesman has confirmed that the Greek bailout plan has arrived!New Greek proposals received by #Eurogroup president @J_Dijsselbloem, important for institutions to consider these in their assessment8.51pm BSTSounds like the Greek proposal has been fired across to Brussels; if so, that’s AHEAD of the midnight deadline.#Greece reforms' proposal sent to the Institutions and #Eurogroup's Dijsselbloem ~official8.33pm BST8.15pm BSTHere’s our latest news story about tonight’s developments:The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday.Athens is understood to have put forward a package of reforms and public spending cuts worth €13bn (£9.3bn) to secure a third bailout from creditors that could raise $50bn and allow it to stay inside the currency union.Related: Greece debt crisis: Athens accepts harsh austerity as bailout deal nears8.02pm BSTA group of pro-EU demonstrators have gathered outside the Greek parliament tonight:6.47pm BSTFriday will be busy....Greek PM Tsipras has called a meeting of party lawmakers for 0600BST tomorrow (@RANsquawk)6.29pm BSTInternational observers have been telling us today that the package is likely to be so punitive that humanitarian aid cannot be ruled out.EU president Jean Claude Juncker had mentioned humanitarian aid as part of the “detailed Grexit scenario” plans creditors had drawn up. EU diplomats based in Athens said some form of assistance is likely to be given even if am agreement between Greece its creditors is reached.6.21pm BSTWe don’t yet know the details of Greece’s plan, but one report says there will be €13bn of fresh austerity. A heavy blow for the economy after years of recession, and the current banking shutdown.#Greece reforms proposal foresees €13bn of fiscal measures and €50bn of requested loan ~source #ESM6.11pm BSTThe irony has not been lost on anyone - even though governing MPs are making light of it - that after the Greeks’ resounding rejection of further biting austerity at the weekend, prime minister Alexis Tsipras has with lightning speed now agreed to put his name to the most punitive austerity package any government has been asked to implement during the five years of economic crisis in Greece.6.05pm BSTBreaking news in Athens.In an emergency meeting the Greek government has approved the package of measures it will present to creditors (hopefully later this evening) to break the impasse and reach an agreement, our correspondent Helena Smith reports.4.25pm BSTTime for a recapThe Greek government is furiously scrambling to draw up a credible package of economic reforms to deliver to its creditors before midnight tonight, ahead of Sunday meetings that will decide its future in the eurozone.The world waits for the #Greek proposals which have been penned here at the office of @atsipras #GreeceCrisis pic.twitter.com/eNxUCP9V7URealistic proposal from Athens needs to be matched by realistic proposal from creditors on debt sustainability to create win-win situationNo matter what. Help to #Greece no justification of wrong economic philosophy causing the crisis. "Magnum vectigal est parsimonia"“Debt sustainability is not feasible without a haircut and I think the IMF is correct in saying that....There cannot be a haircut because it would infringe the system of the European Union.”Schaeuble: "We could take Puerto Rico into euro if #US were willing to take #Greece into dollar. (Jack Lew) thought that was a joke” #uhmBy Monday morning, hopefully, it should be pretty clear whether or not Greece is staying in the euro area – at least for the next few months.It seems very unlikely that over the next 72 hours the two sides will bridge the gap between Tsipras’ desire for a debt write-down and the Europeans’ reluctance to offer anything up-front without Greece actually implementing (as opposed to promising to implement) reforms.* Euro zone finance ministers plan to start Eurogroup on Greece at 3pm cet (1300 gmt) Saturday to discuss Greek proposals - officials - RTRSSunday's #EuroSummit to start at 16.00, subsequent special meeting of the European Council to start at 18.00. #EUCO #Greece3.53pm BSTEuropean commission vice-president Valdis Dombrovskis has confirmed that Greece’s lenders are working on a debt sustainability analysis, ready for the weekend.Debt relief: EC is not interfering on IMF's work. Now we're working together with ECB & IMF on t debt sust analysis: @VDombrovskis #Greece3.26pm BSTIn Spain, a video is doing the rounds shows Greek prime minister Alexis Tsipras -- whether intentionally or not -- snubbing his Spanish anti-austerity ally, Podemos’ Pablo Iglesias.The video, shot as Tsipras visited the European parliament on Wednesday, shows the Syriza leader greeting politicians. As Iglesias puts his hand on Tsipras’ shoulder and holds out his other hand, Tsipras instead turns to French MEP Jean-Luc Mélenchon.“The circumstances are different and it makes no sense to draw parallels.”3.22pm BSTMr Schäuble is in a witty moody today....What? --> GERMAN FINANCE MINISTER SCHAEUBLE: OFFERED LEW TO TAKE PUERTO RICO IF US TAKES GREECE - MNI#MichelSapin @Min_Finances and #Schäuble @BMF_Bund discussion finished, video follows at http://t.co/0d35dsGAa7 pic.twitter.com/LHbDfVA7jZ3.18pm BSTWoah! Back in Frankfurt, Wolfgang Schäuble has said the IMF is correct that Greece needs a haircut make its debt sustainable; but alas this isn’t possible under European rules.GERMANY'S SCHAEUBLE SAYS DEBT SUSTAINABILITY IS NOT FEASIBLE WITHOUT A HAIRCUT, THINK THE IMF IS CORRECT IN SAYING THAT- GERMANY'S SCHAEUBLE SAYS CANNOT BE A HAIRCUT BECAUSE IT WOULD INFRINGE SYSTEM OF EUROPEAN UNION so they are out*SCHAEUBLE: LEEWAY FOR GREEK DEBT REPROFILING VERY SMALL3.04pm BSTSpotted: Greece’s new finance minister, Euclid Tsakalotos, chatting with his predecessor Yanis Varoufakis in the Athens parliament today.2.59pm BSTFrench finance minister Michel Sapin has also weighed in on the Greek crisis.Reuters has the details:“Balanced budgetary strategies are necessary and efforts are needed to boost investment,” Sapin told a conference in Frankfurt. “We must find the right balance between indispensable budgetary consideration and boosting growth.”Regarding Greece, Sapin said there was a need to rebuild confidence and trust to find a solution to the current crisis#greece macron, valls, sapin, even god forbid hollande. nice to see the french standing up for a change #vivela...2.57pm BSTOver in Frankfurt, German finance minister Wolfgang Schäuble called for the eurozone to be strengthened to avoid a repeat of the Greek crisis.

Greek cabinet backs a 13-page package of reforms and spending cuts worth €13bn to secure third bailout and modest debt writeoffThe Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday.Related: Greek crisis: Government agrees reform measures - live updates Continue reading...

The economics thinktank has once again identified, then costed, the gap between George Osborne’s rhetoric and realityIt all seemed to be going well for George Osborne. A confident display in the Commons. A big increase in the minimum wage. Headlines to die for in the Conservative-supporting papers.Then the Institute for Fiscal Studies came along. Over the years it has become almost a ritual, whichever party is in power, for the IFS to pick the budget to pieces. This was no exception and Osborne’s latest offering got the full treatment.Related: Budget 2015: tax credit claimants will be up to £1,000 a year worse off, says IFSRelated: Taking the measure of the ‘national living wage’ | Letters Continue reading...

Investment in high-quality training is crucial to help youths avoid chronic long-term unemployment, says OECDYounger workers struggling to find jobs after the financial crisis risk a lifetime trapped at the bottom of the economic ladder unless governments move swiftly to improve their skills and boost investment, according to the Organisation for Economic Cooperation and Development (OECD).The Paris-based organisation said the global jobs recovery was slowly gathering pace, but long-term unemployment remained a headache for many countries, especially in Europe. More than one in three jobseekers in the 34 OECD countries have been out of work for 12 months or more, equivalent to 15.7m people.Related: Not in Education, Employment or Training: Europe's lost NEET generation detailed Continue reading...

Fund reduces prediction for global output from 3.5% to 3.3%, with economic outlook for for four G7 countries skewed downwardsThe International Monetary Fund has cut its global growth forecast for 2015 after a harsh winter led to a weak start in the US.In an update to its World Economic Outlook (WEO), the Washington-based IMF said it now expected global output to expand by 3.3%, down from the 3.5% it pencilled in three months ago. Continue reading...

In Latvia and Lithuania, pensioners and other poor people wonder why they are being asked to pay to bail out their far richer Greek counterpartsHalf a continent away from Athens, Milda is unimpressed. Watching reports of the Greek predicament on the news, the Latvian pensioner has little sympathy for her counterparts 1,800 miles to the south.“Can’t they get by on €120 a week?” she asks, referring to the latest cash limits on pensioners introduced in Greece. “Life’s less expensive down there. It’s warmer, they don’t have to pay for heating or winter boots, and fruit and vegetables must be cheaper.Related: Unsustainable futures? The Greek pensions dilemma explained Continue reading...

Democrats pounce on remark as proof Republican presidential candidate is ‘out of touch’ with ordinary AmericansJeb Bush has said Americans should have the chance to work longer hours, a remark that drew criticism from Democrats.The Republican presidential candidate said the remark was intended to highlight that an improved US economy could create more full-time jobs.Related: Clinton v Bush: America is getting the dynastic matchup it said it didn't wantJeb Bush's "Americans should work longer hours"...wow, that's a line against him for as long as he's in this race Continue reading...

The head of the International Monetary Fund (IMF), Christine Lagarde, reiterates that the global financial institution can not bend its rules when it comes to Greece. Lagarde says that Greece's massive debt will need restructuring, calling the current situation an acute crisis. France and Germany have told Greece to come up with serious proposals in order to restart financial talks with the goal of negotiating a new bailout plan Continue reading...

More of the tax burden will be heaped on young people – stripping them of housing benefits and making them wait longer for extra childcare subsidiesIn March, George Osborne was all tough talk. To repeat one of his favourite phrases, there was a need to “fix the roof while the sun shines” – and that meant driving down public spending to create a budget surplus in 2018-19.Now the surplus can wait another year. A smoother path of austerity will ease the tension inside Whitehall and economic growth will take up the slack, lifting wages and tax receipts. Continue reading...

With austerity dividing north and south, and young and old, it’s not just mad Ukippers and odd Tories questioning the idea of a European identityTo be Eurosceptic used to mean believing all sorts of rubbish about no longer being allowed to say “two fat ladies” for 88 at the bingo and being forced to eat straight bananas. Being anti-Europe meant tutting over Euro-madness stories in the Daily Mail and railing against “human rights” in general or the metric system specifically. My grandad held out against decimalisation until his dying day. It was the beginning of the end, he reckoned.For my generation, though, being pro-Europe was as easy as getting on a cheap flight, and as the flights got cheaper, many people felt a little bit more European, in a “Wow, isn’t Barcelona great” way. We consumed the culture without asking who produced the politics. Anyway, the mantra is still that being in Europe is good for business and business is always good. The left takes for granted this kind of pro-Europe attitude. So does Cameron, in assuming a referendum to stay in Europe will easily be won with cross-party support. It’s only mad Ukippers and odd Tories and swivel-eyed Little Englanders who bang on about Europe, who refuse this modern European identity. Oh, and Tony Benn and Bob Crow, when they were alive. But let’s forget that old left tradition, shall we? Continue reading...

The chancellor compared the UK’s economy with that of Greece in his budget speech. Does George Osborne’s claim stand up or was it just political rhetoric?Greece has featured several times in George Osborne’s narrative about the UK’s public finances. He likened Britain’s rising debt levels to those of Greece in his 2010 budget and repeated the same warning in his latest budget speech.Related: George Osborne lures voters towards glimmer of light in budget speech Continue reading...

George Osborne said in his budget speech that most benefits have risen by 21% against 11% for wages – but he seems to have chosen his examples carefully

More than $3tn wiped in market crash, which threatens to delay economic reforms and sully the image of China’s politicians – including Xi JinpingChina’s stock market crash has wiped more than $3tn off the value of its companies in less than a month, a collapse likely to hinder promised efforts to reform the economy and which may undermine the standing of leaders including the Chinese president, Xi Jinping.The country’s wider economy is relatively well insulated, despite the astounding scale of the losses, both because the value of shares traded is a far smaller portion of national income than in the west, and because they have soaked up a lesser percentage of household assets.

George Osborne is introducing a law banning deficits in normal economic times – but what is ‘normal’, and how common are surpluses elsewhere?George Osborne is introducing a law that bans the government from falling into deficit in “normal” economic times.The main focus of Osborne’s time as chancellor has been cutting the amount of money the government needs to borrow. According to Office for Budgetary Responsibility (OBR) forecasts, the government will be in surplus by 2019-20, a year later than was forecast in the pre-election budget in March.Osborne on Greece: "If the country is not in control of borrowing, the borrowing takes control of the country”.Erm.. pic.twitter.com/EA9eQXC8kg Continue reading...

No one in Athens is mentioning a plan B but if talks to find a deal with creditors fail, Greece will have to print its old currency. Whether it can is another matterGreece’s ability to print its way out of crisis would start at 320 Mesogeion Avenue. It is here, behind high walls and iron bars – daubed with the revolutionary graffiti of anti-capitalist leftists – that the country’s central bank has a currency press.Set amid pistachio and pine trees, it is here that Greece once printed drachmas, the world’s oldest currency and the one used from its modern incarnation almost 200 years ago until it joined the euro. If a euro exit beckoned, and the legal tender was re-embraced, the printing works in the iron-clad building would start to roll.Related: Greece crisis: Tsipras under pressure to submit reform blueprint to creditors Continue reading...

Troika of bailout supervisors to receive proposals from Athens by midnight on Thursday, giving them 48 hours to examine them before summit on SundayGreece is under intense pressure to table a last-chance blueprint for radical economic reform, tax increases and spending cuts on Thursday in order to secure a future in the euro and stave off financial collapse.The reform proposals are to be sent to Greece’s creditors with negotiations at the critical stage. The embattled Greek prime minister, Alexis Tsipras, accused his eurozone creditors on Wednesday of exploiting his country as an “austerity laboratory” for the past five years while formally asking Europe for three more years of rescue funds.This is really and truly the final wake​up call for Greece but also for us, our last chanceRelated: Grain or democracy: the choice for Greece | Letters Continue reading...

More than 80% of investors in China are individuals, and on the streets of Shanghai, everyone knows someone who has lost money in stock market crisis

Acting Labour leader Harriet Harman accuses George Osborne of using the Budget to advance his own political career at the expense of the British public. Responding after the chancellor unveiled the first Conservative budget in 20 years, Harman says that the budget is less about economic strategy and more about political tactics to help Osborne move into No. 10 Continue reading...

Shares have plunged 30% in three weeks, hundreds of firms have suspended dealings and fears that the slump will spill over into other markets are growingStock markets in China are tumbling. A three-week plunge has knocked about 30% off Chinese shares since mid-June. China’s securities regulator has warned of “panic sentiment” gripping investors, many of whom are individuals that have borrowed heavily to play the stock market.Related: Chinese stock markets continue to nosedive as regulator warns of panicRelated: China stocks tumble again after premier Li Keqiang fails to mention crisis Continue reading...

Osborne has slowed down deficit reduction – a wise move given what happened the last time he tried it and current global uncertaintiesIt is one of the iron rules of British politics that chancellors take tough decisions in the budget that immediately follow a general election – and George Osborne did not break with tradition.Related: George Osborne introduces new 'living wage' but cuts working-age benefitsRelated: Budget 2015: 25 key points at a glance Continue reading...

Chancellor portrays the Conservatives as the party of working people by declaring that the living wage will be introduced from next April

George Osborne has unveiled his latest budget: here are the key pointsRevised down for 2015 to 2.4% from 2.5%. Forecast to grow 2.3% next year – the same as the last budget – and then grow the year after that.Rowena Mason, political correspondent: Osborne gets this little bit of negative economic news out of the way early in his speech, moving on swiftly to boasts about higher tax receipts and creation of more jobs.RM: The chancellor is repeatedly trying to emphasise that his cuts will not be deeper or more severe than in the last parliament, attempting to cast them as moderate in the face of some Tory jitters about the scale of the public spending reductions.Osborne does in fact appear to have watered down his planned cuts, with higher public spending than he forecast in March and an extra year to achieve his aim of a budget surplus. In fact, the Office for Budget Responsibility says he is using the budget to ‘loosen significantly the impending squeeze on public services spending’.RM: Osborne is risking strikes here with continued public sector pay restraint for another four years – on top of the last five years. That will be almost a decade of low pay rises for public sector workers.RM: Labour’s idea of a crackdown on non-doms has been nakedly stolen by Osborne, who rejected Ed Miliband’s popular idea before the election. He is not quite going as far as Labour, which recommended abolishing it, but anyone resident in the UK for 15 of the last 20 years will no longer get to enjoy the status. Osborne repeatedly unveils crackdowns on tax avoidance but Labour has questioned how much it actually raises.RM: It sounds like this could raise more money from the banks than the current levy. It’s another idea very similar to one of Labour’s pre-election pledges that Osborne has borrowed.RM: Tory backbenchers will be breathing a sigh of relief that fuel duty is again frozen but it’s not clear what the reformed vehicle excise duty to pay for new roads will mean for either motorists or the environment.RM: This looks rather like a tax, despite Osborne’s pre-election claims that tax rises would not be necessary.RM: This is going to prompt claims that Osborne is disproportionately targeting the young when seeking savings. The Sutton Trust has already said it could tip the balance against low and middle income youngsters going to university.RM: Osborne’s plan to create a northern powerhouse really gets up the nose of Labour MPs who feel this should be their territory. However, Labour has begun to point out where the plans are more style than substance.RM: This was heavily trailed and is opposed by all the Labour leadership candidates as well as trade unions.RM: This is an interesting move that suggests Osborne is at last acknowledging the ‘risks to stability’ of an overheating housing market.RM: A key plank of the Tory manifesto, the chancellor is signalling this is a priority by implementing it so early in the parliament – seven years after he first promised it while in opposition.RM: This looks like a major shake-up to stop tax avoidance through use of personal service companies.RM: This may be a concession to business as the government tries to put pressure on companies to raise wages for the lowest earners. But it is a bold move at a time when he is about to slash welfare and the rate is already at the lowest in the G7.RM: Osborne seemed to promise no more cuts to BBC budget in return for it taking on the extra cost of free TV licences which could explain why the corporation has accepted it.RM: Osborne has wriggled out of David Cameron’s promise not to cut benefits for the “most disabled”.The rest of the announcement is as expected given the heavy hints about reforming the tax credit system but is likely to draw intense criticism that Osborne is punishing children who cannot help being born in into large, low income families. Labour will now have to decide whether it can stomach this in pursuit of appearing tough on welfare, along with the lower benefit cap and removal of housing benefit for under-21s.RM: The Conservatives have whole-heartedly adopted this policy from the Lib Dems despite criticism that it no longer helps the lowest paid because they are now already exempt from taxation. It is some of the best paid in the workforce around the higher rate threshold who will get the biggest benefit.RM: This is the rabbit from the hat. After giving businesses a cut in corporation tax and lower national insurance contributions for small firms, they will be forced to pay their workers who are over 25 at least £7.20 an hour, rising to £9, by 2020. Osborne said 2.5m of the lowest paid will get a pay rise.RM: The government was vulnerable on this after criticism from military figures, Tory backbenchers and US officials, so some extra money for defence has obviously been found down the back of the Treasury sofa. Continue reading...

Fears for the euro’s political sustainability are vastly overblown. Grexit would be an unprecedented event, but poses no existential threat to the single currencyWith a final decision about Greece’s future in the eurozone expected on Sunday, the crucial question in the mind of European leaders will be what a deal would mean for the short- and long-term sustainability of eurozone and European integration. Since coming into office, the Athens government has relentlessly argued that Greek expulsion would inevitably trigger an unravelling of the monetary union, and ultimately deal a fatal blow to the European project itself.Until recently this narrative had gained little traction, but as Grexit becomes the default scenario and media coverage more frantic, more commentators warn of a potential “Lehman moment” for the EU. They fear that Grexit would undermine public trust in the core values of the EU and turn the eurozone into a currency-peg arrangement, which will be unpicked by financial markets or populist political leaders seeking an easy way out. Even the German weekly Der Spiegel showed Merkel sitting on ancient Greek ruins, under the headline: “If the euro fails, so does Merkel’s chancellorship”.Related: Alexis Tsipras: Greece used as 'austerity laboratory' – live updatesGrexit would increase the chances of further eurozone deepening through stronger institutions and fiscal policy Continue reading...

Alexis Tsipras remains hopeful that by end of week he will reach an agreement in best interests of both Greece and the eurozoneGreece has submitted an application for a third bailout programme, in an attempt to avoid crashing out of the eurozone.The finance minister, Euclid Tsakalotos, marked his third day in office by requesting a three-year aid plan from Europe’s permanent bailout fund, the ESM.* Reuters poll-median 55 pct probability of Greece leaving Euro zone: economists (45 pct last week; first ever over 50 pct).@ManfredWeber "Mr Tsipras, the extremists of Europe are applauding you. You are surrounding yourself with the wrong friends."Weber: Rather than holding referenda, other member states have got on with reforms and fiscal consolidation your rule has been catastrophic Continue reading...

I think we’ll all have a few pressing questions for George Osborne tomorrow, but for now, allow me to tell you what budgets are all about

The country’s financial crisis has made day-to-day living hard – affecting everything from paying the rent to restrictions on what people can buy1 CashGreeks cannot withdraw more than €60 – about £43 – a day from cash machines. Cash is running out, with shortages of €5, €10 and €20 notes and €1 coins. Queues at cash machines are long.Related: Greece given days to agree bailout deal or face banking collapse and euro exit Continue reading...