FPC fears financial markets may turn against UK economy in time of stress as gap between money paid out and money brought in was 50% higher than expectedThe UK’s large current account deficit could cause financial markets to turn against the British economy in a time of stress, the Bank of England has said.The Bank’s financial policy committee (FPC) discussed the current account deficit at its most recent meeting in March and decided to keep it under close review, the meeting minutes showed.

Success will come if the new Asian Infrastructure Investment Bank acts more as a knowledge bank rather than a funding vehicle

Survey of services, construction and manufacturing indicate UK plc grew by 0.7% in first quarterBritain’s services sector moved up a gear in March, boosting George Osborne’s hopes of strong economic growth ahead of next month’s general election.Rising order books and increased foreign investment pushed the Markit/Cips purchasing managers’ index (PMI) for the service industries, which account for about 77% of the economy, to a seven-month high. Continue reading...

Employer group says UK too reliant on services for growth and rise in sterling, especially against euro, has hit export ordersThe soaring value of the pound has battered Britain’s manufacturing exports, leaving the economy reliant on the consumer-driven services sector for growth, the CBI has warned.The business lobby group said the UK economy looked likely to gather momentum over the coming months after a steady performance so far this year, but said the strong pound had triggered a slide in export orders. Continue reading...

Greek finance minister meets with senior officials in hope of shoring up support from the US to protect country from expulsion from eurozoneYanis Varoufakis, the Greek finance minister, has continued efforts to drum up support in the US for his debt-stricken country as speculation mounted over the ability of the Athens government to survive in its current form.Extending his charm offensive to Washington DC, the flamboyant finance minister held talks with senior administration officials after meeting IMF managing director Christine Lagarde and attempting to allay fears of an imminent Greek default.Related: Greek government takes desperate measures in battle to stay afloatRelated: Alexis Tsipras looks to Moscow but risks becoming Putin’s useful idiot | Natalie Nougayrède Continue reading...

Conservative and Labour pledges on education disguise the effects of upcoming cuts and contribution increases at the heart of the union’s proposal to strikeThe National Union of Teachers’ approval for a strike ballot brings to the fore a dirty secret shared by the Conservatives and Labour: that funding for schools in England will see steep cuts based on the promises both parties have made.It is an issue that has largely flown under the election campaign radar so far, but schools and local authorities across England are now having to deal with the scope of the cuts as they set their budgets for next year, with many saying they are being forced to dip into their reserves to maintain staffing.Related: Teachers' union backs ballot on strike tied to schools funding Continue reading...

The Swedish term ‘lagom’ is the perfect term to describe an economic system where just enough is produced and consumed. But is this an achievable goal?The current capitalist economic system is in continual crisis. As Thomas Friedman, said in a New York Times op-ed: “What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall, when mother nature and the market both said, ‘no more’.”

Yanis Varoufakis assures IMF’s Christine Lagarde that Athens will repay €450m loan on Thursday as pressure mounts over slow-moving negotiations

While economists are divided over when the Bank of England will end this current spell of steady interest rates, no one expects rates to match their 1940-1951 runThe Bank of England is expected to leave interest rates on hold at 0.5% this week, marking the first time in more than half a century that a government has enjoyed unchanged borrowing costs for its entire term.Interest rates were slashed to a record low of 0.5% in 2009 in a bid to stem the fallout from the global financial crisis. They have remained there ever since, with ultra-loose monetary policy the backdrop throughout the coalition’s time in office beginning in 2010. Continue reading...

Warning from Corn Flakes maker comes amid international pressure to close tax loopholesKellogg’s has warned that its profits could be hurt by the international drive against tax avoidance, which is targeting structures that benefit multinationals.The US-based maker of Corn Flakes, Rice Krispies and Coco Pops is worried that attempts to close tax loopholes would lead to a “material” increase in its income tax bill.

With a rise in VAT, national insurance and income tax off limits, the Treasury has picked up on the idea that the financial sector is under-taxedSolemn commitments have been made. David Cameron and Ed Miliband have wrung promises out of each other. The tax arms race has escalated to the point where the options available to Labour and the Conservatives for raising extra revenue are narrowing.Yet, taxes are still likely to go up once the election is over. Traditionally, political parties that say “they have no plans” to raise taxes before polling day find a compelling reason to do so as soon as voters have made their choice. As the Institute for Fiscal Studies has noted, if a government is going to raise taxes, it does so in the first budget after a general election. Continue reading...

Labour highlights figures showing cost to families with children from rise in VAT and cuts to tax credits under ConservativesHouseholds are worse off to the tune of £1,100 a year as a result of the rise in VAT and cuts to tax credits, according to Ed Balls.Balls has released a new poster with the figure of £1,100 superimposed over the black door of the chancellor’s official Downing Street residence. The poster says: “£1,100. The cost of a Tory chancellor.” Continue reading...

Athens moves to quell fears of a default after a series of contradictory statements by saying it is ready to make the repayment on time on 9 AprilSenior Greek officials are racing to calm fears that the debt-laden country will fail to make a crucial repayment next week – a move that could push the nation into default and create mayhem in the financial markets.Ahead of a 9 April deadline to pay €460m (£340m) to the International Monetary Fund, there are concerns that Greece does not have the cash and risks a rare default on a loan. Continue reading...

Price of oil drops over belief that country will soon be able to resume position as one of world’s biggest crude exporters, flooding already oversupplied market

Economy adds only half what analysts had predicted as Obama says ‘we’ve got to stay humming’The US economy added 126,000 jobs in March – but the unemployment rate was unchanged at 5.5%.The March jobs report failed to meet expectations; although economists had expected the unemployment rate to hold steady at 5.5%, which it did, they had predicted that the non-farm payroll would grow by 245,000 jobs. Continue reading...

Could it be possible to trace social history of a city and its hardships via the stories and sympathies of its shop workers?It was 25 years ago when the first Aldi opened in Stechford, Birmingham. I met, quite by chance, the grandson of Stechford’s original grocer. The family was put out of the shopkeeping business not by the German discount superstore but by their own upward mobility.Ian Blakeman, 49, was a well-known prison governor; he’s now at the National Offender Management Service. “My mother would never drink Coke because they stored vinegar in the bottles and she once took a mouthful by accident,” he told me, as we waited on a train platform. Continue reading...

Author of an exposé of the murky world of high-frequency trading on how his explosive book brought Wall Street to a standstillIn his V-neck sweater, dad jeans and white New Balance sneakers, Michael Lewis doesn’t look like a troublemaker. Sitting in a tapas bar in Berkeley, California, he bears a passing resemblance to a stretched-out Michael J Fox and shares the actor’s boyish enthusiasm and easy charm.This time last year, the bestselling author brought Wall Street to a standstill, and the book that caused the trouble continues to send shockwaves through the financial system.I have been amazed at how resistant people are to actually fixing an obvious problemIt does seem to me that the system is broken Continue reading...

Rolling economic and financial news, as financial markets hunker down for the Easter break without a Greek breakthrough in sight

NGOs launch collective call for revamp of World Bank’s private sector arm amid accusations it has ‘lost control of the way money is spent’The World Bank must “completely overhaul” a funding model built on heavy investment in financial companies that leaves the organisation with little control over where its money ends up, a group of NGOs has warned.The bank’s private sector arm, the International Finance Corporation (IFC), invested $36bn (£24.5bn) in financial companies including hedge funds, private equity firms and commercial banks between 2009 and 2013, according to a report released on Thursday. The study, prepared by NGOs including Oxfam, Global Witness and the Bretton Woods Project, said these funds would be better used to pursue development targets in areas such as education and public health. Continue reading...

Berlin should adopt policies that boost Germany’s domestic spending and reduce its large surplus, otherwise upturn in single currency bloc may not be able to weather the wealth of threats it faces both inside and outside EuropeThe latest economic data from the eurozone suggest that recovery may be at hand. What is driving the upturn? What obstacles does it face? And what can be done to sustain it?The immediate causes of recovery are not difficult to discern. Last year, the eurozone was on the verge of a double-dip recession. When it recently fell into technical deflation, the European Central Bank finally pulled the trigger on aggressive easing and launched a combination of quantitative easing (including sovereign-bond purchases) and negative policy rates. Continue reading...

Confidence for year ahead at nine-year high but PMI survey suggests builders are delaying spending decisions until after 7 May pollGrowth in the UK’s construction sector slowed in March as customers delayed making spending decisions because of uncertainty over the general election.Housebuilders, commercial builders, and civil engineers all reported slowing output growth last month, with the rise in new orders also easing compared with February. Continue reading...

Trade unionist and IFS chief also among the 14-strong board charged with winning back public trust in scandal-hit banking industryThe body tasked with improving behaviour in the UK’s scandal-hit banking industry has appointed a panel including a bishop, a trade unionist and a human rights campaigner to see the job through.The Banking Standards Board, created last year, said a diverse group of people had been selected to start the long road to winning back the public’s trust, lost in the wake of the financial crisis.Related: HSBC must do more to clean up operations, says report Continue reading...

Athens has warned its creditors that the viability of the EU is at stake, as it submits a new economic programme in an attempt to get financial aid before it runs out of cash

As fresh polling shows Clegg is heading for defeat in Sheffield, follow the latest from the campaign trail with Andrew Sparrow and the Guardian politics team

As data shows 0.2% drop in output, two-thirds of leading UK economists say coalition austerity has been bad for the economyDavid Cameron has presided over an economy with the weakest productivity record of any government since the second world war, the Office for National Statistics said as it revealed output per worker fell again in the final three months of 2014.The ONS said productivity decreased by 0.2% in the third quarter of the financial year, leaving output per hour worked little changed on the previous year and slightly lower than in 2007, before the UK’s longest and deepest modern recession.

Executives praising Tory economic stewardship in the Telegraph ignore falling productivity, flatlining living standards, stalled investment and a record current account deficitConservative party managers take their pre-election letters to the Daily Telegraph from business leaders terribly seriously. The exercise has become a ritual. The rounding-up of supporters starts months in advance and each letter must carry more signatories than the last.On that narrow measure, Wednesday’s letter succeeds. There are 103 names versus 68 in 2010. The letter is also more of a full-throated call to vote Tory, rather than last time’s specific applause for George Osborne’s plan to halt a rise in national insurance. Continue reading...

George Osborne can correctly say that the economy grew faster than any other advanced economy – but that comes with a few caveatsThe Telegraph has published a letter from 100 business leaders saying a Labour government would be a risk to the economy. An excerpt from it reads:Britain grew faster than any other major economy last year and businesses like ours have created over 1.85m new jobs.

Analysis: while the interests of chief executives and the country may no longer be seen as synonymous, Labour knows it must tread carefullyIf anyone thinks Labour does not privately care about the opinions of business, it is worth recalling what Douglas Alexander, the head of the Labour election campaign committee, said he had learned in the wake of the Scottish independence referendum.After the no team had scored a clear but close victory, he told the Guardian: “Don’t discount the capacity of business still to have influence in the business square. It’s naive to think it does not matter at all. Continue reading...

Council tax, water charges and mobile phone bills all among living costs to have undergone price hikes this week despite inflation dropping to 50-year lowFor the first time since 1960, the UK is currently experiencing zero inflation. But that does not mean all price rises are on hold. In fact there have been a number of price hikes this week – many taking effect on Wednesday – with households seeing increases to costs as wide-ranging as stamps, air travel and spectacles. Continue reading...

Workers employed to make products for Nike, Adidas and others have staged a fifth day of strikes over social insurance cover. Vietnam is seeking to sign a free trade deal with the European Union and push ahead with the Trans-Pacific Partnership but the continuing strike presents a hurdle for the one-party state Continue reading...

Almost half of workers unhappy with employer’s pay decisions and even more feel left in the dark over how to secure a rise this yearThe typical pay rise for UK workers has been 2% for two years running, with almost half unsatisfied with their employer’s decision, according to a new report.CIPD, the professional body for HR workers, warns employers that they must invest more in training and communicate better with workers about pay if they want to see gains in productivity. Its survey with YouGov of 2,255 workers found more than half, or 53%, received a pay rise in 2014, compared with 51% in 2013 while almost two-thirds are optimistic about getting another rise this year. Continue reading...

Lives are being trashed by klepto-remuneration: theft through excess rewards to rapacious bossesThere is an inverse relationship between utility and reward. The most lucrative, prestigious jobs tend to cause the greatest harm. The most useful workers tend to be paid least and treated worst.I was reminded of this while listening last week to a care worker describing her job. Carole’s company gives her a rota of, er, three half-hour visits an hour. It takes no account of the time required to travel between jobs, and doesn’t pay her for it either, which means she makes less than the minimum wage. During the few minutes she spends with a client, she may have to get them out of bed, help them on the toilet, wash them, dress them, make breakfast and give them their medicines. If she ever gets a break, she told the BBC radio programme You and Yours, she spends it with her clients. For some, she is the only person they see all day.Related: We’re treating soil like dirt. It’s a fatal mistake, because all human life depends on it | George MonbiotAs the pay gap widens the uselessness ratio is going through the roofRelated: What’s the link between this great rail disaster and 2014’s floods? Killing trees | George Monbiot Continue reading...

All the latest economic and financial news, including developments around Greece’s debt negotiations, new eurozone unemployment and inflation data, and updated UK growth stats

Tories welcome figures showing GDP growth revised to 0.6% but Labour says government has been complacent on grounds that people are still worse offLiving standards have been thrust to the centre of the general election campaign as official figures showed Britain is undergoing the slowest recovery since the 1920s and GDP per head still remains lower than levels before the recession.Labour has accused the Conservatives of complacency on the grounds that people are still worse off after the Office for National Statistics showed GDP per head remains 1.2% below pre-economic downturn levels.Related: UK GDP: different measures, competing narrativesRelated: UK growth revised up to 0.6% in last quarter - live updates Continue reading...

New data shows living standards maybe, finally, recovering to pre-recession levels but is it too late for the Tories or too early for Labour?There was something for everyone in the latest UK economic data. Growth in the final three months of 2014 was revised up. That was good news for the government. The balance of payments deficit last year was the highest since modern records began in 1948. That was not so welcome.But with an election five weeks away, the most interesting release from the Office for National Statistics was the one dealing with wellbeing. Living standards are key to the result on 7 May and here all sides can use the official data to weave their own narrative.Related: Living standards key to UK election as data shows slowest recovery since 1920s Continue reading...

Reality check: the headline figures the PM quotes mask the rise of zero-hours contracts, self-employment, and low payDavid Cameron claims that his government has created 1,000 jobs a day since the coalition came to power in 2010. He also claims that a Conservative government would continue to create jobs at the same rate if elected in May.The prime minister told BBC Breakfast:Over the last five years we’ve created a thousand jobs a day, and we commit to continuing that record because we’re going to continue supporting business and industry, continuing to make our country an attractive one to invest in and so we believe we can create those thousand jobs.Related: Election 2015: Cameron warns of 'dangerous' Labour tax rises – liveThey’re going to come from successful British businesses, large and small, that are expanding because we’ve got a long-term economic plan that’s working.

With the fictional divide beween deserving and undeserving poor collapsing, the Conservatives’ ugly logic is turning into the one story they truly fearIt was the raw early days of the coalition, and one of David Cameron’s lieutenants was giving a frank answer to my blunt question: what would it take for the government to pull back on its planned cuts? You didn’t need a Mensa membership to see that this topic would define the next five years.On that sunny autumn afternoon, the newspapers were full of students besieging Conservative central office, but Cameron’s aide coolly judged that they’d blown it by picking the wrong target. Had they swarmed on Lib Dem HQ “that would really have put Clegg under pressure”. So what would change Tory minds? “The crunch will come when the Mail puts on its front page pictures of some Iraq war veteran in a wheelchair who’s lost his disability benefits.”Related: Skivers v strivers: the argument that pollutes people's minds'I’ve got a dog and have to make sure he’s OK,' one says cheerfully. 'If need be I’ll eat his biscuits.' Continue reading...

Gfk poll finds consumer confidence helped by low inflation and buoyant job market, while Bank of England reports highest mortgage approvals in six monthsBritons enter the five-week election campaign more upbeat about the economy than at any time in almost 13 years, according to the latest snapshot of confidence from the polling organisation Gfk. Against a backdrop of falling inflation and a boost to spending power from plunging energy prices, Gfk said all five of its measures of consumer confidence had picked up in the past month.The people polled said they were more positive about their own personal finances and the state of the economy than they were in February, with more prepared to make a major purchase. Continue reading...

Alexis Tsipras has told the Greek parliament that he will not cross ‘red lines’ on pensions and VAT, as MPs debate its debt negotiations

Alexis Tsipras is dangerously isolated in Europe, but that’s bad for Europe tooNegotiating with Greece’s lenders was bound to be a struggle for Alexis Tsipras’s government. The radical left prime minister hoped not only to pull Greece out of austerity programmes that have caused so much social suffering but also to put the whole of Europe on to a new economic course. That was always an ambitious project, and now it’s unravelling fast. The inexperience of Greece’s new leadership has certainly played a role. But the odds were difficult from the start: Greece’s European partners have been adamant, over the past two months, that there was no way that the current bailout programme, negotiated back in 2012, could be amended – at least not without clear proof that structural reforms would be forthcoming. When Greece obtained a reprieve on 20 Febuary the conditions attached were very clear: any extra spending on pensions or salaries would have to be met with equivalent cuts. Put bluntly, there was going to be no free lunch for Greece, whatever its woes, and Germany’s finance minister, Wolfgang Schäuble, who carries much weight on such issues, has made sure fiscal orthodoxy would prevail. This is the difficult equation Mr Tsipras continued to confront on Monday as officials from the eurozone pored over the measures put forward by his government late last week.Mr Tsipras must show he has the credentials to be a realistic partner Continue reading...

Officials attempt to secure bailout funds from creditors amid suggestions that proposals from Alexis Tsipras’s government are not detailed enoughGreek officials were locked in talks with eurozone creditors on Monday amid signs that the country’s list of reforms might not be detailed enough to allow a much needed tranche of bailout funds to be released.The Greek government presented the reforms demanded by its lenders on Friday, but despite talks over the weekend, the two sides seemed no closer to an agreement. Without more aid, Greece could run out of cash before the end of next month, while a €450m (£329m) payment needs to be made to the International Monetary Fund on 9 April. Continue reading...

Scenarios to gauge UK banks’ ability to weather economic shocks include a dramatic slowdown in China and prolonged period of global deflationThe Bank of England is to impose a series of tests on large UK banks to establish whether they are able to withstand a dramatic slowdown in China, a contraction in the eurozone, the worst deflation since the 1930s or a fall in UK interest rates to zero.The Co-operative bank – which failed last year’s tests – is no longer included in the annual assessments of the industry’s financial strength as it is too small, leaving six banks and the Nationwide building society to be tested.Related: Bank of England stress tests: what are the banks being tested on? Continue reading...