European leaders have met in Brussels for a summit overshadowed by Greece’s debt crisis

Economy doubles growth rate to 0.6% as NIESR predicts annual growth of 2.5% but drop in manufacturing deals blow to George OsborneA rebound in North Sea oil production in the three months to May helped the UK double its growth rate to 0.6% from the first quarter of the year, handing the Treasury a much-needed boost.According to the National Institute for Economic & Social Research (NIESR), output improved on the 0.5% in the three months to April and soared above the meagre 0.3% seen in the first three months of the year.Related: Growth, what growth? Thatcherism fails to produce the goods Continue reading...

Leadership candidate admits there are merits in George Osborne’s plans, while two rivals struggle to get nominations to stand in race to succeed Ed Miliband

George Osborne announces plans for permanent budget surpluses designed to cut the national debt. Speaking during his annual Mansion House speech on Wednesday, the chancellor says he will introduce a 'new settlement' that will allow the government to borrow only in exceptional circumstances and ensures successive governments run a budget surplus. Treasury figures show that in only seven of the past 50 years have governments run a budget surplus Continue reading...

Lower oil prices and looming US interest rate rise lead to downgrades for countries including Nigeria, Angola and Brazil, while India bucks trendThe World Bank has cut its forecasts for growth across emerging economies this year, warning that they face a double whammy from rising US interest rates and lower commodity prices. “Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment,” said the bank’s president, Jim Yong Kim, as the anti-poverty body published its twice-yearly Global Economic Prospects document.Growth in emerging economies is expected to be 4.4% in 2015, down from the 4.8% the World Bank was expecting in December. Continue reading...

Sale of bailed-out bank’s shares at present prices means a £13bn shortfall for taxpayer from 2008 part-nationalisationGeorge Osborne on Wednesday night signalled his readiness to start selling off the Royal Bank of Scotland, seven years after it was rescued from collapse by the taxpayer.The chancellor said the time was right for British business and taxpayers to start selling off part of the 79% stake in the Edinburgh-based bank, even though the shares are worth £13bn less than the state paid for them during the financial crisis. The shares will be sold to major City institutions in the coming months. An offer for members of the public, as has been promised for Lloyds Banking Group, could follow. Continue reading...

Greece’s punishment and Cameron’s referendum games underline who really calls the shots in the EUFor the true face of the European Union, look no further than the war now being waged on Greece by its troika of euro creditors. No people have suffered more from the eurozone crisis than the Greeks. The victim of rapacious European banks, a corrupt elite, and a half-baked, lopsided currency union, Greece has paid a pulverising price for the financial crash and eurozone meltdown.Related: Tsipras meets Merkel amid talk of compromise - live updatesEU treaties enforcing privatisation and corporate privilege would be a serious obstacle to progressive change in Britain Continue reading...

Britain still tolerates economy-threatening monoliths like HSBC. In America they know that small worksShock horror. A chancellor of the exchequer thinks we should not spend beyond our means. The habit must end. The Micawberish cliche, respun by George Osborne’s aides before his Mansion House speech tonight, is hardly new. Jim Callaghan shouted it at a rally in 1976, as did Margaret Thatcher at her party ad nauseam. Gordon Brown had his 1997 “golden rule” and America its Gramm-Rudman act. Such homespun mantras are recited by treasuries round the world, but they are dust blown away by the hurricane of politics. Like all voodoo economics, they are both right and rubbish.Related: George Osborne moves to peg public finances to Victorian valuesLondon's financial community is in denial. It believes the past is best forgottenRelated: Labour overspending did not trigger financial crash, says senior civil servant Continue reading...

Europe is facing a social emergency. Tackling it requires a common budget and a joint insurance scheme for jobseekersDespite some signs of recovery, the euro area’s economic performance remains disappointing. The lasting impact of the financial crisis exposes a lack of demand, structural impediments to growth and job creation, and flaws in the architecture of economic and monetary union.Persistently high unemployment rates have led to widespread popular disaffection with the currency in particular, and the European project more broadly. No wonder so many Europeans are now convinced that the way to solve these problems is to unwind integration and retrench behind national borders.We can either muddle through or we can face up to the challenges in bold and concrete waysWe need to anchor expectations to the irreversibility of the euro, rebuild confidence and restore trust among members Continue reading...

Apparent softening of Berlin’s stance towards Athens cheers investors keen to see sustainable rescue after months of wranglingStock markets surged on Wednesday after reports of a German proposal to allow Greece to receive a drip-feed of loans in return for a staggered reform programme.The softening of the German stance towards Athens cheered investors keen to see a sustainable rescue of the debt-stricken country after more than four months of wrangling.

Supermarket shares rise as chief points out that customers’ average spend has not fallenSainsbury’s has revealed its sixth quarter of falling sales, but chief executive Mike Coupe insisted there were signs of improvement on the horizon as shoppers start to increase the number of purchased items.Sales at the supermarket’s established stores fell 2.1% in the last three months amid a continuing price war which has dragged down grocery prices by 2.5% year-on-year. Continue reading...

Chancellor will use Mansion House speech to outline new fiscal framework with aim of permanent budget surpluses and only ‘exceptional’ borrowingGeorge Osborne is to announce a return to the public finances of the Victorian age, with plans for permanent budget surpluses designed to cut the national debt and to make life uncomfortable for the Labour party.The chancellor will use his annual Mansion House speech on Wednesday to exploit the political advantage of the Conservative victory in the general election with a “new settlement” that would allow the government to borrow only in exceptional circumstances.Related: The Guardian view on George Osborne: free and frightening | Editorial Continue reading...

Cutting back on parks, cycling infrastructure and leisure budgets will prove to be a false economy. There are huge financial benefits to having a healthy populaceCities fit for people, rather than exhaust pipes; cities where residents are happier, have improved physical and mental wellbeing, sleep better, live longer. In our age of deficit fetishism, the success of a policy is judged by its economic returns, rather than whether it improves the lives of living, breathing human beings. But a new study suggests that cities that invest in encouraging their citizens to be physically active reap both financial and human rewards.For every pound cities across the world invest in walking and cycling projects, for example, the returns average £13; here in Britain, it could be as high as £19. Investing in green spaces and public transport clears both the air and the roads, and makes cities pleasant places to live.Prosperous nations have the wealth to invest in their cities, however much today’s politicians protest otherwiseRelated: Sick cities: why urban living can be bad for your mental health Continue reading...

The Syriza-led coalition’s long fight to end years of austerity by striking a deal with the troika is nearing its end. Here are the main players of the eurozone crisisGreece is almost entirely friendless as it enters the final phase of talks over a multibillion-pound rescue deal. The prime minister, Alexis Tsipras, was elected to end austerity, but he has no money and few allies.Athens has tried for the last four months to reverse six years of post-crash austerity policies while extracting a better deal from the EU – and in the process has upset almost everybody who might have had the power and inclination to help. Continue reading...

Greek officials have proposed a new plan to break the deadlock, as prime minister Alexis Tsipras warns failure would be the beginning of the end of the eurozone.

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Around 17,000 workers across the UK will stage walkout over pensions on 22 June, with 4,000 people employed at the plant in the south Wales townPlumes of dark smoke spiral from the chimney stacks sticking out of the grey dirt around Port Talbot docks. It is not a pretty sight, but this industrial mess of blast furnaces, warehouses and cooling towers has been at the centre of modern steelmaking in these parts since 1902.This south Wales town, like the British steel industry, has seen better days. But things are about to take a new turn for the worse. On Monday 22 June, around 17,000 workers at Tata Steel plants across the country will bring Britain’s steel industry to a halt with the first national strike for 35 years.Related: Tata Steel UK workers to strike in dispute over pensionsRelated: Welsh town with steel at its heart casts a wary eye at the futureRelated: Why doesn't Britain make things any more? Continue reading...

Creditors face two unpalatable scenarios: Greece leaves the euro and defaults on its euro-denominated debt, or it stays with the help of further write-downsIt is surely clear to all sides by now – if rarely admitted – that Greece will never fully repay its bailout loans. The current approach requires Greece to run a large and protracted budget surplus to satisfy its creditors’ demands. This will force it to drain itself of demand for a generation or more to transfer to other countries huge amounts of what the Greek people produce.History and economic principles teach us that trying to enforce such reparations-style logic on a heavily damaged economy will only serve to destroy it and harm the intended recipients too. It is time to end the pretence, and for Greek sovereign debt write-downs to become the central carrot for motivating growth-enhancing reforms in Greece.Related: Greek exit would trigger eurozone collapse, says Alexis TsiprasRelated: Young Greek radicals don’t just want power – they want to remake the world | Paul Mason Continue reading...

Economists said the narrowing boded well for overall growth after net trade was a drag on the economy in a slow first quarter to 2015A jump in exports helped Britain’s trade gap narrow to its smallest for a year in April, raising hopes that overall economic growth has rebounded from its slump at the start of 2015.The Office for National Statistics (ONS) said goods exports rose and imports fell in April, helping the trade deficit to shrink by more than City economists had forecast and by the biggest amount since June 2013. At £8.6bn after £10.7bn the month before, it was the lowest deficit since March 2014. Continue reading...

Greek prime minister warns of ‘the beginning of the end of the eurozone’, but says a deal between Athens and creditors could be closeAlexis Tsipras has warned that the failure to agree a rescue deal for Greece would spell the end of the eurozone as he submitted a revised package of reforms to negotiators in Brussels.The Greek prime minister said if Greece failed, Europe’s leaders would have a bigger disaster on their hands because “it will be the beginning of the end of the eurozone”.Related: Greece submits new reform plan amid talk of bailout extension - live updates Continue reading...

Dilma Rousseff-led government takes austerity measures after latest drop in GDP confirms economic stall of South American and Brics powerhouseThe signs that Brazil’s economy is in trouble have been visible for a while now, but the worst could be still to come. The figures published last month for gross domestic product in the first quarter of 2015 confirmed the absence of growth that has plagued Latin America’s powerhouse for the past five years.With GDP down by 0.2% since the new year – a fall of 1.6% compared with the same period of 2014 – Brazil has registered its worst result in six years. Even if it has actually fared better than the 0.5% drop forecast by the markets, the outlook for the world’s seventh-largest economy nevertheless looks gloomy. The figures are bad enough to reduce the already limited room for manoeuvre available to the newly appointed and ever so orthodox finance minister, Joaquim Levy. Last month he announced far-reaching austerity measures, with cuts amounting to 69.7bn reals ($22.4bn), prompting an outcry from members of his own party, who want a more flexible line. Continue reading...

Funeral costs have risen 80% in a decade, leaving the poorest and most vulnerable unable to bury their deadThe manager of a north Liverpool credit union recently told me that the most shocking fallout of the recession and austerity was the sheer volume of people calling because they were unable to bury their loved ones. “People call from the hospital, because they can’t pay the £1,000 to get the undertakers to release the body,” she said. “And these people, they’re under 50. That’s no age to die.”The sharp rise in funeral poverty is one of the grimmer trends in our unequal island: in the past decade, funeral costs have risen by 80%. Wages simply haven’t. The average funeral now costs £3,163 nationally, and £4,836 in London. If you’re on a low income, the cost of a sudden death is far beyond your modest means, and life insurance can seem like an unnecessary luxury when you’re struggling to heat your home and feed your children.Related: The return of the pauper’s funeral to austerity Britain Continue reading...

As pressure mounts on Athens, finance minister Yanis Varoufakis tells audience in Berlin that the crisis can be solved in a night

Iata says global profits will almost double to $29.3bn (£19bn) in 2015, helped by the stronger dollarAirlines are making more profits than ever before, boosted by lower fuel prices and carrying more passengers on fuller planes, according to the industry’s global body.The International Air Transport Association said global profits will almost double to $29.3bn (£19bn) in 2015, with American-based airlines having a particularly lucrative year on the back of a strong dollar. Continue reading...

Covering issues from Europe to terrorism and IT, the lesser known Bilderberg policy conference includes prime ministers, CEOs from banks, airlines, oil and the arms industry, and even George Osborne

Agency says Brexit would close UK off from common market, trade opportunities and protections, and put pressure on the poundA vote to leave the EU could cut the UK’s credit rating, according to the ratings agency Moody’s, which has waded into the debate with a warning about rushing the referendum.The agency, which rates UK government debt one notch below the top triple-A score, says holding a referendum on EU membership next year would cut the period of uncertainty but at the same time would allow less time to negotiate reforms with Brussels.In Moody’s view, a shorter time frame increases the risk that the UK government will not manage to secure the changes that it is seeking, which in turn may negatively influence the government’s willingness to support remaining in the EU,” the agency says in an update on the UK.While the outcome of the referendum remains uncertain, Moody’s believes that a withdrawal from the EU would have negative implications for the UK’s growth prospects and – in the absence of an alternative trade arrangement with the EU that at least partly replicates the current access to the EU’s single market – would likely put pressure on the UK’s sovereign rating.Related: David Cameron may bring EU referendum forward to 2016Moody’s believes that the government will indeed manage to reduce the budget deficit substantially over the coming years, given its commitment as well as robust GDP growth and a continuing low interest-rate and inflation environment,” says the report, by senior credit officer Kathrin Muehlbronner.At the same time, the rating agency believes that achieving the spending cuts targeted by the government might be difficult to achieve in full, and the agency therefore expects a more moderate reduction in the budget deficit, to just above 1% of GDP by the end of this parliament.Related: OECD tells George Osborne to spread pain of public spending cutsThe UK’s economic growth pattern remains relatively unbalanced and mainly driven by domestic demand and the services sector, while exports and manufacturing remain subdued.Longer-term growth challenges for the UK economy might arise if the weak productivity performance of the past several years persists. Continue reading...

Imports last month were down 17% on levels in May 2014 despite interest rate cuts as country struggles with move to consumer-led economyChinese imports fell for a seventh straight month in May while exports also sank, according to official data, as the world’s second-biggest economy shows protracted weakness even in the face of government measures to stimulate growth.The disappointing figures, out on Monday, also come as leaders try to transform the economy to one where growth is driven by consumer spending rather than government investment and exports.Related: China lowers growth target to 7% as it fights 'deep-seated' economic problems Continue reading...

The business lobby group’s leader, John Cridland, says a sharp slowdown at the start of 2015 mustn’t compromise the government’s programme of cutsBritain’s leading corporate lobby group has insisted the government should press ahead with its austerity drive, despite warnings that another round of deep cuts could dent the recovery.The CBI on Monday joins other forecasters in cutting its outlook for the UK economy after a sharp slowdown at the start of the year. But it believes the weakness will prove to be short-lived and is no reason for the newly elected Conservative government to reconsider plans for another round of cuts. Continue reading...

Irate European commission president accuses Greek PM of undermining negotiations, and leaders agree to maintain Russia sanctionsEuropean Union officials delivered a blistering attack on the Greek government at the G7 summit in Bavaria, and world leaders including Barack Obama sought to avoid a transatlantic split over Ukraine by agreeing to maintain sanctions against Russia.In a day of secluded talks in the Alpine resort of Schloss Elmau, the biggest drama was provided by a verbal attack on the Greek prime minister, Alexis Tsipras, by the European commission president, Jean-Claude Juncker. Continue reading...

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The G7 has for a long time lacked the unanimity and leadership to tackle its many problems, particularly cutting carbon emissions and Greece’s unpayable debts

Leaders to gather in Schloss Elmau with state of Greek bailout set to dominate and Angela Merkel calling for countries to commit to Green Climate FundDavid Cameron joins the G7 summit of leading industrialised nations in Bavaria expecting to face a crowded agenda dominated by Ukraine, the Greek bailout and climate change.The summit host, Angela Merkel, fought hard to try to seal a deal with the Greek government before the summit, but failed, ensuring Barack Obama will want an update on how close Europe is to ending an impasse that still hangs over the world economy.Related: Protesters and police clash as G7 leaders prepare to discuss corruption and tradeRelated: Barack Obama on G7 unity mission as US president looks to repair German ties Continue reading...

Economists are starting to line up to warn of the danger behind the chancellor’s £25bn onslaught on public servicesIt’s a measure of the triumph of the pro-austerity argument in Britain that George Osborne presented his latest round of cuts in the Commons last week – a down payment on the £25bn he plans to make over the next three years – as a “culture of good housekeeping” in government. Austerity as common sense.With a historic general election victory under their belts, and Labour still obsessed with repudiating their own general election manifesto – and even trashing spending decisions Gordon Brown made seven or eight years ago – the Tories have a wide open field. But the forthcoming onslaught on the public services cannot be left unopposed.Less than 25% of UK debts is owed to overseas investors and there is little evidence that bondholders want fresh cuts Continue reading...

Holidays could be trickier, beaches dirtier, and some jobs would be at risk1. Travelling in the EUBritish visitors to mainland Europe would no longer be “fast-tracked” through the EU lines at passport control, unless the UK was willing to agree that there would still be full free movement of people between the UK and EU. It is unlikely that the EU would require British citizens to have visas to visit the EU - as long as the UK, in return, didn’t demand that the citizens of any EU country (such as Romania) needed a visa to visit Britain. Continue reading...

The rest of Europe is braced for bruising negotiations with David Cameron over reform of the EU. In capitals such as Warsaw, there is bemusement at the idea of ‘Brexit’Eleven years ago Poland threw in its lot, somewhat nervously, with the west and joined the European Union. But in the prime minister’s chancellery building in Warsaw – once home to the imperial Russian army’s cadet corps – no one now questions the wisdom of its decision.“Communism left us doubting our abilities,” admits Rafał Trzaskowski, the country’s secretary of state for European affairs. “We did not know how quickly we would adapt our mentality to the capitalist economy after so many years of communism.” Continue reading...

The IMF announced that the yuan was no longer overvalued, but history teaches us its trade surplus should now be drying up – and it’s not. Meanwhile the US economy could take a hit as a strong dollar (rightly) leads to a trade deficitChina’s yuan is no longer undervalued – or so the International Monetary Fund said last month.The basis for this claim is that China’s central bank is no longer engaged in large-scale interventions in currency markets and its trade imbalance is within a normal range. After being as high as 10% of GDP in 2007, China’s trade surplus is now just over 2% of its GDP. With this drop in the trade surplus, the IMF was effectively declaring mission accomplished. If only it was so simple. Continue reading...

French minister says COP21 climate conference’s success in curbing emissions requires rich nations to fulfil earlier funding pledges to finance poor countries

Prime minister to tell summit that leading nations must ‘break the taboo on talking about corruption’, calling it ‘arch-enemy of democracy and development’David Cameron is preparing to warn fellow world leaders at the two-day G7 summit that starts in Germany on Sunday that the Fifa bribery scandal must be a trigger for international action against corruption.The prime minister will criticise what he will call a widespread “taboo” in pointing the finger at corrupt institutions, and will say the Fifa scandal has shown how focusing on an organisation can provide the impetus for cleaning-up operations.Related: Greg Dyke predicts Sepp Blatter’s arrest and rules out World Cup in EnglandRelated: A dark day for Fifa after claims of arms deals for World Cup votes Continue reading...

Alexis Tsipras strikes a defiant note as he addresses the Greek parliament on Friday. Tsipras says the Greek government cannot in any way agree to 'absurd' proposals that continue austerity, and asks Europe not to humiliate Greece. Tsipras was presented with a tough cash-for-reforms deal on Wednesday, including tax hikes, privatisations and pension reform, which sparked outrage from Syriza Continue reading...