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...

Survey of 973 households reveals 40% expecting salaries be reduced or kept at same level in contrast to chancellor claiming to have restored UK living standardsMore than 40% of Britain’s recession-scarred workers expect to receive a pay freeze or a cut to their wages this year despite George Osborne’s claim to have restored living standards, ensuring they would “grow strongly every year for the rest of the decade”.Just one in five of these workers expect their pay to rise by 2% or more in 2015, according to a new survey by information provider Markit, raising doubts about whether economic recovery can be sustained. Continue reading...

Iain Duncan Smith says Conservatives will talk about where axe should fall when party is ready, as IFS director warns of ‘pretty dramatic’ cutsThe Conservatives may not reveal details of plans to slash £12bn from the benefits bill before voters go to the polls on 7 May, Iain Duncan Smith has said.The welfare secretary said it may not be “relevant” to explain where the rest of the cuts will fall until after the election. Continue reading...

Abbott government’s statement raises existing concerns about governance and transparency, reflecting divergent views within cabinet on the merits of joiningThe Abbott government has elected to begin the process of joining the China-led Asian Infrastructure Investment Bank – but is still telegraphing concerns about the structure of the organisation.

As Greece puts the finishing touches to its latest round of cuts, some economists are increasingly alarmed about the signals from the world economyGreek ministers are spending this weekend, almost five grinding years since Athens was first bailed out, wrangling over the details of the spending cuts and economic reforms they have drawn up to appease their creditors.As the recriminations fly between Europe’s capitals, campaigners are warning that the global community has failed to learn the lessons of the Greek debt crisis – or even of Argentina’s default in 2001, the consequences of which are still being contested furiously in courts on both sides of the Atlantic.Brazil’s already in great trouble with the strength of the dollar; I dread to think what’s happening in South Africa Continue reading...

After forecasts over interest rates have failed dismally, homebuyers should go for fixed and variable rates simultaneouslyIn March 2009, as the bank base rate was slashed to a historic low of 0.5%, when did the (colossally paid) experts say they would rise again? The Bank of England inflation report tells us those brilliant guys in the City were, on average, anticipating rates back at 4% by mid-2012. In 2010 the consensus was for 3.75% by 2013. In 2011 it was 3.5% by 2014. I dislike the phrase “epic fail”, but this might be a case where it is justified.The trouble is, these forecasts do actually matter. Homebuyers want to know if they should fix their mortgage to protect themselves against future rate rises. Savers want to know if they should put their cash into long-term fixed-rate deposits or hold on for a base rate rise sooner rather than later. Continue reading...

As the EU, ECB and IMF pore over Athens’s latest attempt to unlock financial aid, minister says country is prepared to go it alone ‘if things do not go well’Greece submitted a long-awaited list of structural reforms to its creditors on Friday as its leftist-led government warned it would stop meeting debt obligations if negotiations failed and aid was not forthcoming.As officials from the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) prepared to pore over Athens’s latest proposals, the country’s international economic affairs minister, Euclid Tsakalotos, raised the stakes, saying while Greece wanted an agreement it was prepared to go its own way “in the event of a bad scenario”. Continue reading...

QE aims to save the euro by helping to shrink its worth - it’s a risky strategy but the alternative is a very messy endThe euro has brought a balance-of-payments crisis to Europe, just as the gold standard did in the 1920s. In fact, there is only one difference between the two episodes: during today’s crisis, huge international rescue packages have been available.

The mining empires of Andrew Forrest and Gina Rinehart are under pressure from a global supply glut and falling demand from China, says one leading analystThe Australian iron ore industry is poised for a huge shake-up as the global glut worsens and margins continue to tighten.The nation’s biggest iron ore miners, Rio Tinto and BHP Billiton, are still making money and expanding production, but questions remain about the viability of their heavily indebted rivals Fortescue Metals Group and Gina Rinehart’s Roy Hill project. Continue reading...

Reading President Xi’s mind has become a staple of international relations and global power-playsIt is an old Chinese adage inherited from Sun Tzu, the philosopher and war strategist who is believed to have lived in the sixth century BC or thereabouts: if you want to win a hundred battles, you need to understand your adversary, and you need to understand yourself.This week in Washington a group of foreign policy and security experts discussed China’s rise and the challenges it brings. Much of this discussion, at the event held by the Carnegie Endowment, revolved around trying to read its current leader’s mind. After all, President Xi Jinping is described as the most powerful Chinese ruler since Deng Xiaoping, who led the country towards reform in the 1980s.Related: Kerry calls for China and neighbours to settle maritime dispute peacefullyChina sees Russia as a declining power that can eventually be transformed into an economic colony Continue reading...

Seven years after property crash, the central bank has hailed economic growth of 2.8%. But not all the signs are positiveSeven years after its calamitous property crash in 2008, Spain’s recovery is speeding up, according to the country’s central bank.The Bank of Spain announced on Thursday that economic growth this year would be 2.8%. That would double last year’s figure, which was the first time the country had recorded annual growth since the crisis hit. The latest prediction would put the eurozone’s fourth biggest economy among its fastest-growing ones — behind only Ireland, Latvia, Lithuania and Malta, according to last month’s predictions from Brussels. Continue reading...

Volume of goods sold in UK rose 0.7% in February as Bank of England governor insists UK’s expected negative inflation will not mean deflationary spiralA record fall in high-street prices put a spring in the step of British consumers last month, driving a bigger than expected rise in retail sales.Average store prices in February dropped 3.6% on a year earlier, the largest annual fall since records began in 1997, according to the Office for National Statistics (ONS). Continue reading...

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.