German ministers turn down Greece’s formal request to eurozone partners

Shock announcement from Berlin came after Greece filed formal request to eurozone partnersGermany and Greece are on a collision course ahead of crucial bailout talks on Friday after Berlin knocked back a Greek compromise proposal and insisted the country stick to its existing austerity plan.Setting the scene for a make-or-break meeting in Brussels , the eurozone’s largest economy dismissed as “not substantive” a proposal from Greek finance minister Yanis Varoufakis,which appeared to have all but capitulated to creditors’ demands.Related: Varoufakis and the Greek-German standoff | LettersRelated: Greece seeks six-month bailout extension - live updates Continue reading...

Germany says Greek proposals for a six-month extension to its bailout programme do not go far enough

After the lull at the end of 2014, the halving of cost of crude oil saw order books and factory output increase during early part of this yearOrder books and factory output are being boosted by the tumbling oil price, the CBI has said in its latest health check of UK industry.The employers’ organisation said there had been a bounce back in manufacturing after the lull at the end of 2014, helped by the halving of the cost of crude during the second half of the year. Continue reading...

Strange to say, but when the snow comes, the losers tend to be many big organizations, while winners often are smaller, locally owned firmsYou didn’t have to venture much further than the Amtrak station in Providence, Rhode Island on Tuesday to witness the have/have not economic fallout of the big freeze in action.At one end of the concourse, commuters were lining up to get weather-related refunds for their pricey Acela tickets, after still more snow – another 3ft – brought the city’s total for February alone to more than 2ft. Three inches of snow isn’t much to complain about these days, but combined with the chaos winter has wrought in Boston, it was enough to derail schedules, causing widespread cancellations and delays of more than three hours. I eventually got off my stationary train – which also happened to be without heat and lighting – and trudged back upstairs to join the queue for refunds. Continue reading...

Athens’ decision to accept a eurozone loan extension shows the troika did not really want to negotiate with Syriza - it wanted capitulationThere is a phrase for what Germany is seeking to do to Greece: a Carthaginian peace. It dates back to the Punic wars when Rome emerged victorious in its long struggle with Carthage but refused to allow its opponent the chance of an honourable surrender. Instead, it enforced a brutal settlement, burning Carthage to the ground and enslaving those inhabitants it did not massacre.A Carthaginian peace is what is being offered to Alexis Tsipras. On Thursday, the Greek prime minister made it clear that he was willing to see the white flag of surrender flutter over Athens. He accepted that he would have to swallow most of the conditions demanded of him by Greece’s eurozone partners but asked for a few concessions to sugar the pill.Related: Germany rejects Greek request for loan extensionUnless the Germans are bluffing, it leaves Greece with a binary choice: abject surrender or going nuclear Continue reading...

Rolling coverage of the ongoing Greek debt talks, as Athens announces it will apply for a loan extension on Thursday

With investors parsing every word that comes out of each meeting, split language about raising rates have some wishing the Fed said lessFederal Reserve officials are increasingly at odds over how “patient” they should be with record-low interest rates, according to the minutes of the central bankers’ latest meeting.Interest rates in the US – and in many other countries – have been close to zero since the financial crisis hit in 2008 and triggered a global recession. Continue reading...

Total funding on offer now €68.3bn as Greek banks come close to using €65bn of liquidity funds granted by European Central BankThe embattled Greek government has been thrown a lifeline by the European Central Bank after the ECB agreed to €3.3bn more emergency funds for the country’s banks.Related: When will Greece run out of money? Continue reading...

Europe has a chance to admit its failings over the Greek financial crisis – but it may just keep on diggingDenis Healey had a good rule of thumb for policymakers: when you are in a hole, stop digging. Greece provides a classic example of why the former chancellor was right.Work on the hole Europe has dug for itself began in the 1990s when the flawed plan for monetary union was conceived. Instead of a single currency crowning a process of integration, Europe’s policymakers decided that monetary union would be the catalyst for integration. Far from bringing widely different economies closer together, the euro has highlighted the differences between them.Syriza wants to stay in the eurozone but says conditions attached to the bailout are senseless. It is right Continue reading...

Bonuses paid to small segment of workforce – Bank of England optimistic in forecast that earnings growth will be up to 3.5% by end of year

Readers answer other readers’ questions on subjects ranging from trivial flights of fancy to profound scientific conceptsWhy, whether figures are good or bad, are economists and City analysts always taken by surprise?Peter James, Liskeard, Cornwall Continue reading...

Without a deal to extend the terms of its bailout, Greece is likely to run out of cash. The question is a matter of when – and the answer is complicatedIn order to answer the question of when Greece might run out of cash, let’s start at the top of the debt mountain. The country owes €323bn (£238bn), which is more than 175% of its GDP. About three quarters of Greek debt is owed to the EU and the International Monetary Fund (IMF), two of the three members of the troika that has rescued the country with a contentious bailout package.Where did all the money go? @YiannisMouzakis traces how the troika loans to #Greece were used http://t.co/WmWLAmkK7G pic.twitter.com/9Gy6AQU0rY Continue reading...

Industry experts react to figures that show unemployment fell by 97,000 to 1.86 million in the three months to December last year

This week, Guardian Membership held a debate among an expert panel and a room full of Guardian Members eager to pick apart the TTIP trade agreement between the EU and the US. So, was there any agreement?London’s Conway Hall was the venue for a Guardian Membership event held this week to debate the pros and cons of TTIP. The discussion was chaired by Guardian economics editor Larry Elliott and the panel comprised Claude Moraes, Labour MEP; Owen Tudor, head of European Union and International Relations, TUC; John Hilary, executive director of charity War on Want; and Vicky Pryce, chief economic adviser at the Centre for Economics and Business Research. There was also a room full of impassioned Guardian members. So what did we learn?So what is TTIP?

Leaked document suggests Athens remains committed to repealing some austerity measures attached to original bailoutAthens has confirmed it will ask for a bridging loan from its eurozone partners, as it battles to reach a deal that will secure its future as a member of the single currency.However, a leaked negotiating document from the Greek finance minister, Yanis Varoufakis, suggested the country remained committed to repealing some austerity measures attached to its original bailout.* German economy minister gabriel says welcomes signal from Greek government that it is ready to negotiate - RTRSWe want to believe that we are on a good path. We are coming to the table to find a solution Continue reading...

Bank of England’s chief economist says information revolution may have cognitive costs, with shorter attention spans posing a risk to the next leap in living standardsBefore you tweet about this, spare a thought for economic growth.What if Twitter’s rise is evidence of a damaging decline in attention spans? The same short attention spans that stem creativity, cut educational achievement, stymie investment and prompt Premiership bosses to be fired mid-season.We are clearly in the midst of an information revolution, with close to 99% of the entire stock of information ever created having been generated this century. This has had real benefits. But it may also have had cognitive costs. One of those potential costs is shorter attention spans,” Haldane told the University of East Anglia.“Some societal trends are consistent with that. The tenure of jobs and relationships is declining. The average tenure of Premiership football managers has fallen by one month per year since 1994. On those trends, it will fall below one season by 2020. And what is true of football is true of finance. Average holding periods of assets have fallen tenfold since 1950. The rising incidence of attention deficit disorders, and the rising prominence of Twitter, may be further evidence of shortening attention spans.”It may cause the fast-thinking, reflexive, impatient part of the brain to expand its influence. If so, that would tend to raise societal levels of impatience and slow the accumulation of all types of capital. This could harm medium-term growth. Fast thought could make for slow growth.”If short-termism is on the rise, this puts at risk skills-building, innovation and future growth,” he adds. Continue reading...

Prospect of Greek debt breakthrough and recovery in oil prices power FTSE 100 to 15-year highThe UK stock market hit a 15-year high, buoyed by hopes that Greece will reach a breakthrough with its creditors.A Greek government spokesman said Athens would request an extension of its bailout on Thursday, which expires in 10 days. This will fuel speculation over whether Jeroen Dijsselbloem will call another emergency Eurogroup meeting on Friday to consider the plan. Continue reading...

Before he entered politics, Yanis Varoufakis, the iconoclastic Greek finance minister at the centre of the latest eurozone standoff, wrote this searing account of European capitalism and and how the left can learn from Marx’s mistakesIn 2008, capitalism had its second global spasm. The financial crisis set off a chain reaction that pushed Europe into a downward spiral that continues to this day. Europe’s present situation is not merely a threat for workers, for the dispossessed, for the bankers, for social classes or, indeed, nations. No, Europe’s current posture poses a threat to civilisation as we know it.If my prognosis is correct, and we are not facing just another cyclical slump soon to be overcome, the question that arises for radicals is this: should we welcome this crisis of European capitalism as an opportunity to replace it with a better system? Or should we be so worried about it as to embark upon a campaign for stabilising European capitalism?When called upon to comment on the world we live in, I had no alternative but to fall back on Marxist traditionWhy did Marx not recognise that no truth about capitalism can ever spring out of any mathematical model?Europe’s elites are behaving as if they understand neither the nature of the crisis, nor its implications for the future Continue reading...

Neither Athens nor Brussels has an interest in Greece leaving the eurozone. Compromise will not solve everything but it would win valuable timeIn the next few hours and days Germany and Greece will either fail to save the European Union from a damaging crisis from which it might not fully recover, or they will agree, as now seems more likely, on one of those messy last-minute deals that are the norm in EU affairs. The hints on the evening of 17 February, in defiance of morning pessimism, were that Greece would in fact apply for an extension of its loan deal. Sensible though this is, the terms will be decisive and in any event would be only a temporary, if welcome, respite to the underlying problem. It would be foolish to assume that it represents a conclusive step back from the brink. The stakes remain too high for easy optimism. The fact remains that the shock of a Greek exit from the eurozone, and perhaps the union, would be huge. There is no provision for leaving the euro and none for leaving the union, either by secession or expulsion. The EU has brakes, which may now be applied, but it has no reverse gear.It can be argued that Greece is a small country and also a rather unusual EU member, a sort of special case. But all the members are in their different ways special cases, and while Greece is indeed a small country, it is a small country that would leave a very big hole. People forget the way in which the retreat from authoritarianism in southern Europe, in Greece, Spain and Portugal, was cemented into place by union membership. They overlook Greece’s special relationship to the European idea, a relationship which, as long as the understanding of the classical world as our predecessor and ancestor persists, will continue to deeply influence Europeans. They overlook what arrangements an excluded Greece, even if it remained an EU member, might cultivate, or have to cultivate, with Russia and China.Related: Greece makes concessions under pressure from eurozone Continue reading...

The European Union’s demand that Greece continue with the catastrophic austerity policies of the past five years flies in the face of democracy and sound economics. The Greek people in democratic elections decisively rejected these policies, which have led to a 26% shrinking of the economy, 27% unemployment and 40% of the population on the poverty line. A continuation of austerity will jeopardise the future of the EU and betray principles of democracy, prosperity and solidarity. It risks fuelling the rise of extreme anti-democratic forces in Greece and elsewhere. We urge the European leadership to respect the decision of the Greek people and to give the new government breathing space to reverse the humanitarian crisis and start the necessary reconstruction of the country’s devastated economy.

Disinflation sees consumer prices index fall to 0.3% thanks to drop in cost of crude oil and food but lower wages could make deflation a danger

Rolling coverage as Athens and the eurozone battle to break the deadlock over its loan programme, after Monday night’s talks collapsed

Leftist government has a packed schedule of meetings and repayment deadlines as it seeks to win support for an end to relentless cuts

Three loaves of bread in a window, cans of hairspray, a trailer-load of carrots ... David Hlynsky’s photos show that the dying days of eastern bloc communism didn’t offer much for consumers except visions of Marxist austerityPhotographs of shops in eastern Europe a quarter of a century ago have the quirky appeal of some kind of communist pop art. For the 21st-century British viewer accustomed to endless consumer goods and relentless advertising, they are likely to look charming and innocent, even idyllic. Here is the high street purged and purified: shops that sell just one thing, and tell you what it is with minimalist simplicity. A picture of a ham in what otherwise looks like a domestic window announces a ham-seller. A Moscow toy shop has only a handful of simple, plastic toys in the window. Another shop appears to sell nothing but washing powder. Does the Czech window with a picture of a rabbit seen through a telescopic sight advertise rabbits, rifles or both? Continue reading...

The party’s plans to boost skills and long-term investment are sensible, feasible, and could change Britain for the betterPolicy documents by political parties are typically not the greatest of reads. There is a ritualised attack on the hopeless failings of others, and then a valiant attempt to shoehorn a collection of interventions – some ideological, some a concession to interest groups and some improbably ambitious – into a narrative that only just about has a beginning, middle and end. It’s predictable and incoherent.A Better Plan for Britain’s Prosperity, which sets out Labour’s economic thinking, is much better than I had feared. It’s not Keynes’s General Theory, but it’s a well thought-through attempt at analysing Britain’s problems with some substantive supporting evidence, drawing from a host of small commissions that the party created carefully over the past few years. And it offers a feasible programme that could address the problems it identifies. Claiming it is all anti-business won’t wash. Rather it is for a different kind of business and business culture than that which dominates the economy now.Related: British capitalism is broken. Here’s how to fix it | Will Hutton Continue reading...

Greece refuses to accept demands from eurozone ministers that it should ask for an extension to its bailout Continue reading...

Drop in petrol prices and supermarket price war push inflation to slowest pace since records began in 1989UK inflation fell to the lowest level on record in January as the sharp drop in global oil prices fed through to petrol pumps and food prices continued to fall amid a supermarket price war.The government’s preferred measure of inflation fell to 0.3% in January from 0.5% in December, the slowest pace since equivalent records began for the consumer prices index in 1989.

Greece’s new government must bite the bullet, declare itself bankrupt and break free from the eurozone – only then can its economy and society recoverPray for plan B. However many times Greece’s new leaders swear there is none – pacifying their terrified bankers – they must know what to do if last night’s debt renewal disarray continues. They must take the plunge, bite the bullet, face the music, lance the boil. Only by ending the terrible mistake that was Greece’s eurozone membership can its economy hope to recover.Related: Greece bailout: pressure mounting to agree deal – live updates Continue reading...

Right-wing governments in Europe’s periphery are terrified of a Greek success at the negotiating tableWhile the wealthiest 85 individuals on the planet own more wealth than the bottom half of the world’s population – and when the top 1% will soon own more wealth than the bottom 99% – the people of Greece and the anti-austerity party, Syriza, they elected to lead them are struggling to rebuild their economy so that ordinary people there can live with a shred of dignity and security.But powerful international interests are putting the pro-growth, pro-worker experiment in progressive democracy currently underway in grave danger. Continue reading...

Forecasters claim falling cost of oil and supermarket price war will drag inflation down to 0.4%Inflation is expected to fall to its lowest level in at least 25 years as the dramatic plunge in oil prices and the supermarket price war drag down the cost of living.Analysts expect the Office for National Statistics report released on Tuesday at 9.30am GMT to show that inflation dropped to 0.4% in January. This is down from the 0.5% recorded in December and well below the Bank of England’s 2% target.The combination of rising wages and falling energy and food prices will help household finances and boost the growth of real take-home pay this year to its fastest rate in a decade. This will support solid growth in consumer spending.It is hard to find a labour market indicator that has not brightened. Beyond those in our chart: average hours have risen since 2012; most of the jobs created over the past year have been for full-time employees. Underemployment remains higher than unemployment, but the former has nevertheless fallen markedly from its peak.We have for some months been forecasting 2015 to record the strongest consumption growth in a decade. Improving pay, along with falling petrol and food prices, should combine in a powerful cocktail that puts the fizz back in the UK recovery. The BoE’s updated forecasts this week show rate setters looking for consumers’ real disposable income to gain 3.5% this year, the highest for 10 years. Continue reading...

IT skills should be treated as being as important as numeracy and literacy in British schools, says House of Lords committeeThe teaching of digital skills in schools should be regarded as equally important as lessons in numeracy and literacy, according to a report published on Tuesday.

Rolling coverage as the high-stakes negotiations over Greece’s financial programme hit problems, with eurogroup insisting Athens must ask for a bailout extension

Average wages have decreased in real terms under the present government. Expect more of the same – and worse – if the Tories are re-electedWhich party is most trusted to be on the side of working people? This is set to be a defining question of the general election campaign. Even the Conservatives want to pose as the worker’s new best friend. David Cameron’s recent appeal to business leaders to play nicely and give their staff a pre-election wage boost is their latest bid to shake off a reputation as the party of the rich.But Cameron’s imitation of the TUC’s slogan “Britain needs a pay rise” was more theft than flattery. After all, the prime minister has presided over the longest squeeze on real earnings since the 1850s. And as nurses, firefighters and other public workers suffering real pay cuts can testify, this government has failed to practise what the prime minister preached.Related: Yes, David Cameron, Britain needs a pay rise – so cough up | Simon JenkinsRelated: Low-pay Britain, where working families have to rent a fridge Continue reading...

Annualised 2.2% GDP increase is much smaller than forecast, which underlines country’s struggle to shake off decades of stagnation

Sluggish growth, lack of expansion and failing ‘three-arrow strategy’ in the world’s third largest economy may prompt a currency warJapan is out of recession. After two quarters in which the economy contracted, growth resumed in the final three months of 2014.However, that was the end of the good news for the prime minister, Shinzo Abe. Growth remains sluggish. There was no expansion at all in 2014. The much-vaunted “three-arrow strategy” is proving a bit of a flop. Continue reading...

German finance minister Wolfgang Schäuble blames Syriza-led coalition for impasse and ‘acting irresponsibly’The chances of an early end to Greece’s standoff with its eurozone partners appeared to be fading as Germany adopted a hardline approach to easing the debt burden on Athens ahead of crisis talks in Brussels.Wolfgang Schäuble, Germany’s finance minister, said the Syriza-led coalition government headed by Alexis Tsipras was “acting irresponsibly” and that he felt sorry for the Greek people.“I feel sorry for the Greeks at the moment. They’ve elected a government which is currently acting irresponsibly,” Schäuble said.“Kicking cans down roads is the EU’s forte and the most likely outcome of negotiations with Greece is still that a temporary deal is reached so that talks can continue and funding be maintained for now.”“It appears unlikely that there will be even a short-term ‘bridge’ agreement between Greece and the euro group at today’s meeting, but it is to be hoped that some further common ground can be found.” Continue reading...

From the Swiss National Bank to the Federal Reserve and the ECB, concerns are mounting over central bank liabilities. But should we really be worried?Around the world, central banks’ balance sheets are becoming an increasingly serious concern – most notably for monetary policymakers themselves. When the Swiss National Bank (SNB) abandoned its exchange-rate peg last month, causing the franc to soar by a nosebleed-inducing 20%, it seemed to be acting out of fear that it would suffer balance-sheet losses if it kept purchasing euros and other foreign currencies.Similarly, critics of the decision to embark on quantitative easing in the eurozone worry that the European Central Bank is dangerously exposed to losses on the southern eurozone members’ government bonds. This prompted the ECB Council to leave 80% of those bond purchases on the balance sheets of national central banks, where they will be the responsibility of national governments. Continue reading...

Analysts say lower-than-forecast growth of 2.2% highlights a fragile recovery and underscores challenges facing TokyoJapan’s economy rebounded from recession in the final quarter of last year but growth was weaker than expected as household and corporate spending disappointed, underlining the challenge the prime minister, Shinzo Abe, faces in shaking off decades of stagnation.The annualised 2.2% expansion in October-December was smaller than a 3.7% increase forecast in a Reuters poll, suggesting a fragile recovery as the hangover from last year’s sales tax hike lingered. Continue reading...

Economy grew 0.6% in the fourth quarter of 2014, meaning world’s third largest economy had 0% growth for the year

Business group raises forecast for 2015 to 2.7%, citing falling costs for households and firms, but warns political uncertainty is hurting confidenceLow oil prices and inflation will help Britain record its fastest growth since the financial crisis, according to the CBI.The employers’ lobby group has upgraded its outlook for 2015 on the back of falling costs for households and businesses, echoing comments by the Bank of England governor, Mark Carney, last week that the slump in crude oil prices was “unambiguously positive” for the global economy and for the UK.Falling unemployment, improving wage growth and rock bottom inflation should mean people see more money in their pockets Continue reading...

The former business secretary applauds Labour leader’s industrial policy which focuses attention beyond ‘a handful of people at the top’Peter Mandelson has offered his support for a new initiative by Ed Miliband to recalibrate Britain’s industrial policy to focus attention beyond “a handful of people at the top” to all sections of the economy, including low-paid workers.The former business secretary makes his intervention in a Guardian article on the eve of a speech by the Labour leader in the West Midlands which is inspired by Barack Obama’s campaign to grow the economy “from the middle out, not from the top down”.Related: Labour's plans would unlock the potential of the UK economy Continue reading...

We did not have the chance to prove our credentials and demonstrate that we had the right plan for recoveryLabour is making two arguments about the economy: the shorter term costs of living addressed by its policies for energy prices, housing rents, a higher national minimum wage and the extension of the living wage. And the bigger economic goals – a good job and secure income wherever you live; vocational training or a modern apprenticeship and skills that enable an individual to adapt to changes in the economy. Also good quality infrastructure and higher education.But the Plan for Britain’s Prosperity that Labour is publishing shows that these two elements are part of a bigger whole, the aim of which is not only to ensure a fairer distribution of wealth, but significantly to expand the productive potential of the British economy. When Labour left office in 2010, Britain was on the way to recovery from the banking crisis that had hit us two years before. Of course we borrowed more to keep the economy from free fall and we were right to do so. We needed to accelerate out of the storm and we burned up a lot of costly financial fuel to do so. Equally, we were right to set out clearly how, over the approaching parliament, we would pay down the debt and progressively re-balance the nation’s finances just as now government needs to cut where we have to but invest where we need to.Related: Mandelson backs Miliband's 'middle-out' economic plan Continue reading...

Alexis Tsipras says he is confident Greece can secure a deal, but faces growing criticism at home for softening anti-austerity stanceGreece’s new prime minister Alexis Tsipras is “full of confidence” his country can secure a deal to ditch strict austerity measures while still satisfying Athens’ international creditors, despite warning that crunch talks in Brussels today would be “difficult”.

Former chancellor, who referred to Syriza MPs as ‘latterday Trotskyites’, says it is wrong to blame Germany for plight of GreeceThe “latterday Trotskyites” from Syriza who won the Greek general election have set out on a course that risks a Greek exit from the eurozone, the former chancellor Kenneth Clarke has said.In some of the starkest comments about Greece by a senior British politician, Clarke said he hoped that a “very great deal of work” was being carried out to minimise the impact on financial markets and to relieve poverty in Greece. Continue reading...

Falling oil prices driving inflation down to 0.5% in January, forced Martin Weale and Ian McCafferty to back downFears that Britain could sink into a damaging “deflationary spiral” have stayed the hands of Bank of England policymakers who had pushed for an early interest rate rise, monetary policy committee member Martin Weale has revealed.Weale was one of two MPC members who had consistently voted for higher borrowing costs from August last year, as the economy recovered. But after falling oil prices drove inflation down to 0.5% in January, Weale and his fellow anti-inflation “hawk”, Ian McCafferty, backed down and agreed that rates should remain at their record low of 0.5%. Continue reading...

To many, Greece seems unimportant – just as the collapsed US bank once did. Would letting it go trigger a global crisis?It’s mid-September 2008. The seventh anniversary of the 9/11 terrorist attacks has just been marked. And an American investment bank called Lehman Brothers is in trouble.Lehman is not a particularly big bank. It is not thought to be systemically important for the rest of the global financial system. So when the US authorities are unable to find a private-sector buyer for the stricken bank, they allow it go to the wall. Continue reading...