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...

‘Deprivation poverty’ – not being able afford to buy things most would regard as essential - is on the rise: and more than half of those affected have jobsThere’s a minor domestic crisis in any family when the fridge-freezer breaks down. Wasted food; no fresh milk; pools of water on the kitchen floor. But for some households, the demise of the washing machine, the tumble dryer or the telly is more than a hiccup – it throws up a major financial challenge.That’s where firms like BrightHouse come in: pop into one of its 291 stores, and instead of having to find several hundred pounds up front, you can replace a busted appliance for a much more manageable £10-£15 a week.Many rent-to-own customers – who have on average £19 a week spare for one-off costs – have little or no alternative Continue reading...

I was one of those voting for an interest rate rise last year. Now the risks have changed – but the resolve of the MPC has notMark Carney, the governor of the Bank of England, wrote to the chancellor last week to explain why inflation fell to 0.5% in December, significantly below the monetary policy committee’s target of 2%. As one of the nine policymakers on the monetary policy committee (MPC) at the bank, I had been voting for a rate rise since August but the news about December’s inflation led me to change my vote in January.As the governor explained – and not surprisingly – the single biggest explanation of very low inflation is the decline in the price of oil. Since the inflation rate is measured by looking at the change in prices over 12 months, inflation is likely to stay very low until the sharp fall in oil prices lies more than a year in the past. In fact, because not all prices adjust as rapidly as does petrol, the impact is likely to linger for longer than this.It is suggested central banks have run out of means of returning inflation to target. That is certainly not the case Continue reading...

Founders of LoveFilm and Ecotricity give public backing to Miliband and co, dismissing idea that party is anti-business

The sale of broadcast rights reflects a wider shift: from property to finance, the UK has become the turf on which others playMy first mistake, he told me, was that I still thought of it as a game. Wrong. The best way to think of football was as a TV property, comparable to, say, Downton Abbey.My conversations with senior figures in the Premier League are sufficiently rare that this one stayed with me. It was last autumn, a chance encounter on the fringes of the party conference season. As a relatively new convert to the game, I found each insider nugget fascinating.The problem is that top flight football has soared far beyond the people who were once its anchorsWhat were once modest middle-class ambitions – owning a decent home, perhaps with a garden – are now out of reach Continue reading...

Export powerhouse poised to ‘surf wave of economic wellbeing’ as GDP figures reveal mixed fortunes across eurozone statesStronger-than-expected German growth has signalled a winter recovery for the eurozone economies – though some members, including crisis-hit Greece, were left trailing behind.Official figures showed that GDP across the 19 members of the single currency expanded by 0.3% in the last three months of 2014, led by the export powerhouse Germany, which expanded 0.7%. Germany’s statistics office, Destatis, said domestic demand and exports were strong, helping the economy gather momentum at the end of 2014.Related: Eurozone economy grew by 0.3% in the last quarter Continue reading...

Markets buoyed by possibility of end to standoff as new government in Athens vows to reach dealGreek stock markets have rallied on growing confidence that Athens will reach a deal with its international creditors next week.In the runup to a meeting of eurozone finance ministers on Monday, the new Greek prime minister’s office vowed to do “whatever we can” to come to an agreement over a new support programme for the bailed-out country.The possibilities, given the state of the Greek economy, are limited Continue reading...

Rolling coverage as the latest GDP figures show the state of the eurozone, as Greece bailout talks continues

With the world’s gazed fixed on Athens, a former academic with a penchant for leather jackets has taken centre stage. With no plan B and nothing to lose, he’s ready for battle — and if it all goes wrong, he says, he’ll just get back to his bookYanis Varoufakis, it is fair to say, was barely known not that long ago. True, he was a bit of a celebrity in the arcane world of austerity economics. His vivid views, conveyed through blogs, books, tweets and talks, were the focus of some animation whenever Greece careered in and out of its seemingly endless debt crisis. In Athens, the town where he was born and bred, the economics professor enjoyed a cult following among austerity’s opponents in Syriza, the far-left party that recently surged to power.When the crisis broke – and before he departed for the ivory towers of the University of Texas at Austin – he was a regular in the boisterous talk shows that dominate Greek television. But beyond that, Yanis Varoufakis was just … Yanis Varoufakis. In a wider arena, he was not a name to conjure with. So my first question when we meet in his office on the sixth floor of the finance ministry, which every finance minister has inhabited since Europe’s great Greek debt drama began, is: how does he feel? Is Yanis Varoufakis, the academic turned neophyte politician, entirely comfortable with his new star status?Related: Greece calls for bridging loan; anti-austerity protests in Athens - as it happenedRelated: Profile: Greece’s new finance minister Yanis Varoufakis Continue reading...

Growth figures are healthier than expected, but beneath the surface unemployment and low wages depress living standardsFrankfurt’s stock market has reached a new high, topping 11,000 for the first time. According to the latest eurozone GDP figures, Germany enjoyed strong GDP growth in the last three months of the year and helped push expansion across the currency bloc to 0.3% for the quarter and 0.9% for the year. In Portugal and Spain, the headline growth figures improved. Even Italy beat analysts’ expectations after it avoided a decline.So the recovery is real. In fact, say the eurozone’s top policymakers, it’s all going so well the new Greek government should open its eyes and see the warm, golden glow of sunshine appearing on the horizon. Continue reading...

These billionaires get rich on the back of our taxes but they give nothing in returnThe news this week that a bank helped wealthy customers to dodge taxes should not come as a surprise to many. The super-rich have long held some profoundly distorted ideas about the world. They are more than averagely likely to believe their achievements are the product of their superior brains and hard work. They may believe the Selfish Gene rhetoric that those with the best genes rise to the top of the pond, and at the bottom is genetic sludge. They are oblivious to any evidence to the contrary. They have no idea that had they been born on a sink estate they too would have sunk.This is partly because the super-rich are no longer exposed to data and experiences that contradict their worldview. Flitting between their various homes around the world, they know nothing of our lives. They have never, ever had to sit on the phone waiting for the next available customer support agent – “your call really matters to us” – to not fix their phone/internet/energy bill issue.Related: How to make the wealthy pay tax | Jolyon MaughamThe super-rich have no idea that had they been born on a sink estate they too would have sunk Continue reading...

Brent crude oil prices hit highest level so far this year after collapsing to $45 last month from high of $115 last summer.Oil prices have risen above $60 a barrel for the first time this year amid signs that industry spending cuts might curb supply.Brent crude collapsed 60% from a high of $115 a barrel last summer to $45.19 in January, the lowest in almost six years, as a result of oversupply. Continue reading...

Hopes of a Greek deal and a recovery in oil and metal prices lifts UK marketLeading shares are heading towards their highest level since the dotcom boom in 1999. The FTSE 100 is now at 6872, up 44 points on the day and within 60 points of the closing peak of 6930 hit on 30 December 1999. The move follows a couple of attempts to reach new heights in 2014, but what has driven this latest tilt at the record? Continue reading...

Overall housebuilding experiences sharp drop in output, suggesting slowdown in housing market – but economists urged not to read too much into latest figures

Improvement on 0.2% growth in previous quarter raises hopes that Europe’s weak economic recovery is picking up pace

As the Asian powerhouse cools its extraordinary rate of expansion, Australia must hope that service industries pick up the export baton from the minersFor the first time in almost a quarter of a century, China begins its new year celebrations with a question mark over how the country will maintain its extraordinary growth. The economy is maturing and breakneck expansion is being supplanted by a shift towards services and away from manufacturing, construction and agriculture.For Australia, the implications of these changes are significant. Already, the growth in demand for iron ore and coal from China is slowing, driving the price of these two huge export earners for Australia to levels that are seeing the high-cost producers close down.Related: Hard times return as China bids to bring its economic miracle to an end Continue reading...

Rolling coverage of the deadlock over Greece’s bailout programme, as European leaders gather in Brussels for a summit meeting

Will Hutton’s brave and visionary ideas for reforming British capitalism should be condensed into a terse popular narrative and incorporated into a widely disseminated pre-election “manifesto” (British capitalism is broken. Here’s how to fix it, 11 February). As he says: “The current national conversation is hardly conducive to these ideas”. What about crowd-funded one-page presentations in the national press and social media? It would surely be signed by a long list of respected national figures – not only economists.The distorted imperative of deficit reduction has imposed a straitjacket of negativity around the national conversation Continue reading...