Annual real earnings to rise for first time since 2007 but later retirement age and growing workforce is slowing pace of increases

Introducing a parallel currency would create money and delay Greece’s inevitable financial default. But the strategy will only work if investors believe the country won’t collapseThere’s almost no upside to a eurocrisis. You become part of a rolling maul of politicians, journalists and economists ripping and gouging at each other, both in private and on Twitter. The only advantage of being there is that it forces you to think laterally about money. Soon – if the Greek crisis is not resolved – one of the most audacious pieces of lateral thinking ever could get a try-out: a parallel digital currency, issued by the Greek government, modelled on Bitcoin, but with a crucial difference.Related: The Guardian view on the Greek debt deal: victory or defeat? | Editorial Continue reading...

The chancellor cheers at his failure to deliver his stated ambition of price rises of 2%. That must surely mean that it’s time to change the targetAs polling day nears, we can look forward to a dismal burst of politics as archery. Ministers will brag about bullseyes hit (2m apprenticeships), the opposition will seize on arrows that have veered off course (immigration, the deficit) and wise commentators will explain how the obsession with targets produces all sorts of perversities.Last week, however, when things went wildly off course in relation to the most important target of the lot, we got a topsy-turvy reaction. Instead of popping up with sheepish excuses, the government’s top brass bugled news of their big miss to anyone who would listen. The target is for an inflation rate of 2.0%, with a percentage point miss in either direction being taken so seriously that the governor of the Bank of England has to pick up his pen and explain to the chancellor what’s going on. An undershoot is, very explicitly, formally regarded as “just as bad as inflation above the target”, and so when the January number came in at 0.3% then that represents – surely – a serious misstep.Inflation matters, not only as an imperfect gauge of the industrial mood but also in its own right Continue reading...

The Syriza-led government in Athens has until late Monday night to come up with a list of structural reforms such as deregulation and anti-tax evasion measuresHaving clinched an outline agreement to extend Greece’s bailout by four months in crunch talks in Brussels on Friday, Athens now has its work cut out.Finance minister Yanis Varoufakis and prime minister Alexis Tsipras have until Monday night to come up with a list of proposed structural reforms that will then be scrutinised by international creditors – the troika of the European Central Bank, the European Union and the International Monetary Fund.Related: Greek government races to meet Monday fiscal reform deadline Continue reading...

Five centuries may have passed but Cromwell’s Tudor times offer some remarkable parallels with the economic plight of Britain todayHe works all hours, first up and last to bed. He makes money and he spends it. He will take a bet on anything. A description of a foreign exchange dealer taking big punts in the City? No, think again for this is Hilary Mantel’s description of Thomas Cromwell.The TV adaptation of Wolf Hall ends this week with the fall of Anne Boleyn. Throughout the six episodes, the focus has been on the political themes addressed in the book: Henry VIII’s determination to have a male heir, who’s up and who’s down at court, the break with the Pope over the king’s divorce from Catherine of Aragon. Continue reading...

Minister of state Nikos Pappas said the government was drafting list of reforms including making the civil service more effective and laws to combat tax evasionGreek government officials are racing to complete a list of reform proposals that will be scrutinised by the country’s international creditors this week as Athens seeks an extension to its €240bn (£177bn) bailout.

An unbelievably convenient boost to demand in Britain has come in the nick of electoral time for the ConservativesWhen it comes to the economy, the prime minister and chancellor are enjoying the luck of the devil. After the financial crisis struck in 2007-09, they opposed the Keynesian measures necessary to avert a 1930s-style great depression; and when they assumed the reins of office in 2010 they made misleading comparisons between the state of the British economy and that of Greece and introduced wholly unnecessary “austerity” measures.These latter not only stopped the burgeoning economic recovery in its tracks: they sapped the animal spirits of entrepreneurs and wrecked any hope of the boost to confidence they were supposed to encourage. There followed several years of “flatlining” and missed investment opportunities in the public and private sectors.Instead of counteracting the weakness in demand, the coalition took measures to aggravate it. I am not making this up Continue reading...

Without the single currency and bailouts, Greek, Irish and Portuguese banking systems would have collapsed. Anti-Europeans should acknowledge thisWolfgang Schäuble, Germany’s finance minister, says that the radical left party Syriza will have some difficulty selling what is seen in some circles as Greek climbdown during Friday’s cliffhanger negotiations that tried to put an to end austerity. Elected on an impossible mandate to renegotiate the country’s tough bailout terms and stay in the euro, Syriza now finds itself recommitting to austerity as the price of getting crucial loans extended for four months. Without them, Greek banks would have collapsed. Mr Schäuble seems almost happy that the tieless Syriza leaders, shamelessly talking about reparations for the second world war, have had to confront “reality”.Meanwhile Britain’s army of Eurosceptics have had a field day. If the negotiations had gone wrong, as many predicted, and Greece went on to leave the euro and restore the drachma then it would be the best vindication yet that Eurosceptic Britain was right. The eurozone, already accused of being the single most important, if not the only cause of Europe’s economic plight, would be exposed as teetering on collapse. And if instead Greece managed some compromise deal, then it would be a slap in the face for democracy. Greek voters would have been denied what they had voted for. The EU stands accused, variously, of denying democracy and tethering a country to self-defeating austerity. Continue reading...

Tackling global warming is not just a global responsibility, argues the leader of the Labour party, it’s an economic necessity for BritainThe general election means 2015 is a critical year for Britain. It is also a critical year for the world on climate change. Within months of Britain voting, the UN is holding a summit in Paris to agree a binding global agreement to tackle climate change.But there is a real danger that this great chance to achieve action is going to slip by, without the world even noticing. That might suit some politicians at home but it will be a disaster for our country and the world.Climate change has never been just an environmental issue. It affects the economy, migration and living standards too Continue reading...

Prime minister says his anti-austerity government now faces its toughest work, in first public reaction since deal made to extend bailout for four monthsThe Greek prime minister, Alexis Tsipras, has said the country has won a significant battle but has yet to win the war, in his first public reaction to the latest deal to keep the debt-stricken nation financially afloat.Addressing Greeks less than 12 hours after the agreement was sealed at an emergency meeting of eurozone finance ministers in Brussels, the leftist leader said the hardest work now lay before his anti-austerity government. Continue reading...

Alexis Tsipras and Yanis Varoufakis could have threatened the eurozone with default. Instead, they showed their hand early – and the troika is still in chargeGerman officials chose a suitably Greek metaphor last week as they rejected the anti-austerity Syriza government’s initial demands, accusing finance minister Yanis Varoufakis and his colleagues of wheeling out a “Trojan horse”.As the fraught talks played out, however, instead of an army of fearsome Greek warriors emerging at Varoufakis’s side, it appeared more like one weary foot-soldier, waving an enormous white flag.Debt forgiveness, much talked about during the campaign, seemed to be off the agenda Continue reading...

Syriza’s ministers seem to have agreed bailout terms not very different from those they were elected to rejectAfter five years of living on the brink, Greeks have become inured to make-or-break crisis meetings in Brussels. Wrangling over the details of austerity plans is no longer enough to push irate demonstrators on to the streets of Athens in protest – even if the leftist-led government has done little else since it was catapulted into power three weeks ago.Instead, the Greek capital’s boulevards were buzzing all through last week. On Sunday, as Syriza’s outspoken finance minister, Yanis Varoufakis, prepared to confront his eurozone paymasters for the first time, thousands thronged central Syntagma Square imploring the European Commission, the European Central Bank and the International Monetary Fund – the bodies that have kept their bankrupt nation afloat – to “give Greece a chance”.“Greece has always managed to hold its head high. I think people will respect us, and fear us a little, after this.” Continue reading...

Savers should be prepared to step outside their comfort zone to beat low interest ratesCompanies around the world paid out a record $1.17tn in dividend income during 2015. The figures, published by Henderson Global Investors, highlight an important point for investors: while interest rates remain stuck at historic lows, income seekers who are prepared to take at least some risk with their capital can do far better.Henderson’s analysis shows the UK was one of the world’s best performers last year for dividends, with total payouts up 31% to $135bn. And globally, the stock market has been delivering higher payouts for five years now: total dividend income was 60% higher in 2014 than in 2009. Continue reading...

Move follows S&P’s downrating as agency predicts Ukraine crisis, falling oil price and rouble plunge will bring further gloom

The extension of the Greek bailout with barely a concession to Yanis Varoufakis’s demands proves only that Europe wants him to stick with the programme

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American Legislative Exchange Council combines litigation and legislation in two-pronged attack on ‘new battleground’ of workers’ rights, documents revealA network of Republican lawmakers and their rightwing corporate funders are battling behind closed doors to block minimum wage increases in cities across the US, in a step-by-step counter-attack that could cut back the incomes of millions of Americans despite an economic upswing.According to strategic details obtained by the Guardian, the American Legislative Exchange Council (Alec) – along with its localised sister organization, ACCE – is trying to prevent elected city representatives from raising the minimum wage to levels above those set by their states. The group has launched an aggressive dual-track mission that combines legislation and litigation in what Alec calls a “new battleground” over worker compensation.Related: Obama talks up US recovery and urges Republicans to back higher wages Continue reading...

Obama suggests Republicans are pretending to support the middle class, and teases them by saying: ‘If you want to be the party of higher wages, then come on’Casting his opposition as “shouting” enemies of the average American worker and minimum wage increases, President Obama suggested on Friday that Republicans were faking an interest in the wellbeing of the middle class – and insisted that a recovering economy vindicated his leadership.“The new plan is to rebrand themselves as the party of the middle class,” Obama said of Republicans, to cheers from core party faithful at the Democratic National Committee winter meeting in Washington DC. “I’m not making this up … I think their shift of rhetoric is good if it actually leads them to take different actions. If it doesn’t, it’s just spin.” Continue reading...

After reaping the benefits of world trade we are about to harvest some of the pain, argues one of the UK’s most experienced hedge fund managers

Stubbornness based on pride and prejudice is driving the rift. Reason must kick in before Grexit devastates EuropeAt the heart of the rift that runs through Europe at the moment lies a technocratic debate drowned in emotion. Germany has rejected Greece’s bailout request on the basis of the semantic difference between a programme extension (acceptable) and a loan extension (unacceptable).True, words are substance. But when the German finance minister, Wolfgang Schäuble, or his allies take the floor to explain their critical stance, the underlying reasons become evident: they quickly shift to moral and emotional grounds, invoking trust, values and cultural differences. Continue reading...

The chancellor still has many reasons to be cautious despite the improvement in public finances seen in JanuaryIn an ideal world, George Osborne would be sitting in the Treasury putting the finishing touches to a nice, fat giveaway budget. Five years ago he imagined that by now he would have cut the deficit to below £40bn, providing the scope for some pre-election sweeteners.Doubtless the chancellor will still have a couple of surprises to spring on 18 March, but despite the improvement in the public finances in January, the budget will still need to be a relatively frugal affair.Related: UK finances buoyed by influx of payments from wealthy taxpayers Continue reading...

Chancellor hails biggest monthly surplus in seven years as signal of economic recovery, but critics warn long-term challenges persistThe government’s finances improved last month to post their biggest surplus in seven years, after an influx of delayed payments from wealthy taxpayers who benefited from a cut in the 50p top rate of tax.

Retail figures show average store prices declined at an annual rate of 3.1% last month – the largest drop since records beganPrices in Britain’s shops and forecourts declined at a record pace in January, as plunging global oil prices slashed the cost of petrol.Official retail sales figures, published on Friday, showed average store prices declining at an annual rate of 3.1% last month – the largest drop since records began in 1997. Continue reading...

Outcome of meeting remains clouded in uncertainty after Germany rejected Greek compromise proposalEurozone finance ministers are gathering in Brussels for make-or-break talks that could determine Greece’s future in the eurozone.

Breakaway region relies on Kremlin for 70% of its budget and motherland’s economic woes have left residents feeling the pinch, reports Eurasianet.orgFifty-eight-year-old Veronica Zinici, a pensioner from the rebel republic of Transnistria, recently traveled to the Moldovan capital Chișinău for medical treatment. She also brought with her a tale of hardship.Related: Inside Transnistria, the breakaway nation loyal to Russia – in picturesRelated: Russia’s rouble crisis poses threat to nine countries relying on remittances Continue reading...

Greek finance minister Yanis Varoufakis’s suggestion that “things could get worse in perpetuity, without getting better” (How I became an erratic Marxist, 18 February) is at odds with a key notion of the business cycle – that after a deflationary clearout of the capitalist system in crisis, states have reformed the system to assist the cyclical recovery in such a way as to improve things in the long-run.Marx and the neoliberal economists have relied on the wrong sort of mathematical models to solve the problems, hence the continuation of the crisis without end which Yanis alludes to. Marx was not too hot on understanding what businesses could do to avoid crises, but within any value system appropriate accounting techniques need to be allied to economic theory to work on solving the problems over time. But, yes, stability needs to be established first, as Yanis suggests.

Your piece on the alleged fall of the inflation rate to 0.3% (Report, 18 February) fails to mention that CPI is the government’s claimed measure of inflation, but that RPI is at 1.1%, still not high, but a good bit higher. The government seems to have ground down the journalist profession on this scam and CPI now seems to be the press’s preferred form of inflation too. Despite the recent report by Paul Johnson of the IFS favouring CPI (well CPIH but let’s not go into that), most statisticians in the Royal Statistical Society still say that RPI is a good deal nearer real inflation than CPI and they have written to the UK Statistics Authority, which commissioned Johnson, to say so. This deception adversely affects most pensions and welfare payments, and it is today’s young who will suffer most (as usual) since the effects get cumulatively worse the longer it goes on. It also, of course, allows the government to overstate the real rate of growth.

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...