April 9 2013

Britain’s economy remains fragile but ‘improvements are beginning to be seen’ says OECD chief economist. According to OECD, the UK is expected to show annualised growth of 0.5% in the first quarter, and 1.4% in the second quarter of 2013…


Powered by Guardian.co.ukThis article titled “UK economy should avoid triple-dip recession, OECD forecasts” was written by Josephine Moulds and Phillip Inman, for The Guardian on Thursday 28th March 2013 20.17 UTC

Britain's economy is getting stronger and should avoid a triple-dip recession, according to the Organisation for Economic Co-operation and Development. The Paris-based thinktank sounded a positive note as official figures showed that the services sector, which contracted at the end of last year, returned to growth in January.

Barring changes in government policy, the UK is expected to have grown at an annual rate of 0.5% in the first quarter and to grow at 1.4% in the second.

Pier Carlo Padoan, the OECD's chief economist, said: "The situation [in the UK] is still fragile. I think the policy course, both in terms of monetary and fiscal policy, is going in the right direction and improvements are beginning to be seen."

Until recently, the OECD and the International Monetary Fund had been warning George Osborne that his austerity policies risked prolonging the longest economic depression in 100 years. Padoan had called on the chancellor to relax spending cuts and put forward growth policies, in a shift to a Plan B for the economy.

But the more upbeat outlook from the OECD was reinforced by a survey of the UK's services industry that showed an improvement during January, offsetting a weakening picture in the construction and manufacturing sectors. The Office for National Statistics said the services sector, accounting for three-quarters of economic activity, expanded by 0.3% on the previous month and was 0.8% ahead of the same month a year earlier.

Unfortunately for ministers hoping to see an improvement across the private sector, the strongest element of the services index in recent years has proved to be government spending. The financial services sector has almost recovered to its pre-recession peak, along with business services, leaving the distribution, hotels and restaurants, transport, storage and communication sectors well below their high-water mark.

Chris Williamson, chief economist of financial data provider Markit, said the services data combined with strong retail sales would persuade the Bank of England to stay its hand when it meets next week.

Capital Economics said an increase in quantitative easing from the current £375bn the Bank of England had pumped into the economy would probably need to wait until at least the autumn, when incoming governor Mark Carney would have established a new remit focused on growth.

The OECD said activity was picking up in many major economies, with the global outlook improving since its last update in November. It expected the US to rebound in the first three months of this year, while Japan had been boosted by a new growth strategy and stimulus package. But it said improvements in financial markets around the globe had not been fully reflected in real economic activity, in part because confidence remained low.

Padoan warned that the flood of cheap money into the system, via generous stimulus packages, had also led to some "excessive risk-taking". "We have now learned that imbalances build up in a way we tend to ignore," he said. "Let's watch prices of assets going up which are not warranted by fundamentals. Let's be very careful. At the same time, let's be careful of not putting a brake on the recovery that is slowly materialising. It's a delicate balancing act."

The OECD said a meaningful recovery in Europe would take longer than in the rest of the G7. It blamed this on a deteriorating jobs market, which had depressed consumer confidence. "Especially in Europe, the rise of long-term unemployment, with more of the unemployed moving off unemployment insurance on to less generous social benefits, is worsening poverty and inequality," it said.

The thinktank also highlighted the growing divergence between Germany, which it expects to pick up strongly in the first half of this year, and other economies, which are forecast to either contract or show minimal growth.

Germany is expected to grow by 2.3% on an annual basis in the first quarter, and then 2.6% in the second. By contrast, France is forecast to shrink by 0.6% on an annual basis in the first quarter, followed by 0.5% annualised growth in the second quarter.

Growth in emerging markets is still much faster than in the G7 and these countries will drive the global economy this year. The OECD said annualised growth in China was expected to continue to be well above 8% in the first half of 2013.

US economy perking up

The number of Americans filing new claims for unemployment benefits rose last week, but not enough to suggest the labour market recovery was taking a step back.

Other data showed the economy expanded at an annual rate of 0.4% in the fourth quarter, more than the government had estimated.

The reports reinforced the view that the US economy perked up in the first quarter, although it still appeared vulnerable to fiscal austerity measures that kicked in early in the year.

"The underlying growth trend is showing some encouraging signs, but the key risk is how much fiscal tightening we'll see this year," said Laura Rosner, economist at BNP Paribas in New York.

While jobless claims increased more than expected last week, they have trended lower this year and remain near five-year lows. Last week, initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 357,000, the labor department said.

The four-week moving average for new claims, a better measure of labour market trends, rose 2,250 to 343,000.

Still, for many economists a trend reading below the 350,000 level points to a firm pace of hiring in March. Reuters, Washington

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Slovenia’s PM gives a press conference, insisting that her country is “strong and stable”, urging people to look at the “facts”. Risk of “severe banking crisis” in Slovenia, says OECD. Why the OECD is worried. German imports and exports fall in February…


Powered by Guardian.co.ukThis article titled “Eurozone crisis: Slovenia rejects bailout talk as Soros urges Germany to accept eurobonds – as it happened” was written by Graeme Wearden, for theguardian.com on Tuesday 9th April 2013 18.40 UTC

8.00pm BST

Closing summary

European Commission Chairman Jose Manuel Barroso (R) and Slovenian Prime Minister Alenka Bratusek (L) give a press conference on April 9, 2013 after their working session at EU headquarters in Brussels.
Slovenian Prime Minister Alenka Bratusek (left) with European Commission Chairman Jose Manuel Barroso today. Photograph: GEORGES GOBET/AFP/Getty Images

That's all for today, folks.

Here's a closing summary:

Slovenia's prime minister has denied that she will be forced to seek a bailout.

Alenka Bratusek said that fixing the Slovenian banking sector was her government's top priority, and could be achieved without international help.

She was supported by EC president José Manuel Barroso, who was adamant that Slovenia should not be compared to Cyprus. (see 2.58pm onwards for highlights of their press conference)

But the OECD has warned that Slovenia is on the brink of a serious banking crisis. It wants Bratusek to push on with recapitalising struggling banks and makes wide-ranging reforms (see 12.09pm for details and the report itself).

Slovenia also accepted higher borrowing costs at an bond auction today (results here)

George Soros, the billionaire investor and philanthropist, has given a speech in Frankfurt arguing that Germany should drop its opposition to eurobonds. If it cannot accept collective debt, it should leave the euro, he argued (see 5.25pm).

In Cyprus, officials warns that time is running out to get its bailout finalised (see here)

On the economic front… German exports and imports both fell in February (see here), and Britain's trade gap widened again…. (see here).

Let's do it all again tomorrow. Goodnight!

Updated at 8.04pm BST

7.13pm BST

Interesting piece by Jeremy Warner of the Daily Telegraph tonight: he's suggesting that Angela Merkel could actually make a dramatic conversion in favour of collective debt if she wins this autumn's general election.

The column doesn't actually appear to be linked to Soros's speech tonight (see 5.25pm), as it happens. But it's timely, and a good read – arguing that the German chancellor must consider the issue:

Let's just briefly consider what will in fact have to happen if Merkel is to save the euro and secure her position in history. The present approach amounts to just prancing around in front of the goal posts and won't anywhere near hack it.

The euro can never become a proper currency with a long term future unless it moves fairly rapidly towards A/ a fully fledged banking union, with common deposit insurance and resolution regimes, and B/ at least a degree of debt mutualisation, or fiscal union.

Warner also explains how it's possible to get some degree of shared debt without requiring a new EU treaty or being red-carded by the German constitutional court; although full-blown mutualisation would need major changes.

More here: It's not a question of if, but only when Merkel grasps the nettle of eurozone debt mutualisation.

7.03pm BST

Clock ticking for Cyprus

Over in Cyprus tonight, there is concern that the country is running of time, and money, to actually receive the first slice of its aid package.

My colleague Helena Smith reports that officials have said it is imperative a controversial €10bn bailout is approved by EU parliaments and sealed with international lenders by 24 April.

If an agreement fails to be reached by then – and bailout funds are not there to replenish dried up coffers – President Nicos Anastasiades' administration will face the daunting prospect of being unable to pay state salaries and pensions.

The full story is here: Clock ticking on Cyprus deal

5.25pm BST

Soros: Germany must pick eurobonds or euro-exit

George Soros, the billionaire investor and philanthropist, is giving a speech in Frankfurt now in which he is arguing that Germany must decide whether to embrace eurobonds or whether to leave the eurozone.

Soros's solution for Europe's debt crisis is collective debt backed by the whole of the eurozone not just individual countries. He's made the argument before, but this time his pitch is that the German people have never been given the option of choosing.

We have the full transcript of the speech here:

George Soros: how to save the EU from the euro crisis – the speech in full

So I won't attempt to summarise it.But here's the key paragraphs on eurobonds – which Soros admits are an unpopular idea in Germany today:

People don't realize that agreeing to eurobonds would be much less costly than doing only the minimum to preserve the euro. That is how misconceptions can become engrained in public opinion.

It is up to Germany to decide whether it is willing to authorise eurobonds or not. But it has no right to prevent the heavily indebted countries from escaping their misery by banding together and issuing eurobonds. In other words, if Germany is opposed to eurobonds it should consider leaving the euro and letting the others introduce them.

 This exercise would yield a surprising result: eurobonds issued by a eurozone that excludes Germany would still compare favorably with those of the US, UK and Japan. The net debt of these three countries as a proportion of their GDP is actually higher than that of the eurozone excluding Germany.

And this section, from earlier in the speech explaining why the centre of the eurozone needs to take new steps to ease the crisis:

The burden of responsibility falls mainly on Germany. The Bundesbank helped design the blueprint for the euro whose defects put Germany into the driver's seat. This has created two problems. One is political, the other financial. It is the combination of the two that has rendered the situation so intractable.

The political problem is that Germany did not seek the dominant position into which it has been thrust and it is unwilling to accept the obligations and liabilities that go with it. Germany understandably doesn't want to be the "deep pocket" for the euro. So it extends just enough support to avoid default but nothing more, and as soon as the pressure from the financial markets abates it seeks to tighten the conditions on which the support is given.

The financial problem is that Germany is imposing the wrong policies on the eurozone. Austerity doesn't work. You cannot shrink the debt burden by shrinking the budget deficit. The debt burden is a ratio between the accumulated debt and the GDP, both expressed in nominal terms. And in conditions of inadequate demand, budget cuts cause a more than proportionate reduction in the GDP — in technical terms the so-called fiscal multiplier is greater than one.

The German public finds this difficult to understand. The fiscal and structural reforms undertaken by the Schroeder government worked in 2006; why shouldn't they work for the eurozone a few years later? The answer is that austerity works by increasing exports and reducing imports. When everybody is doing the same thing it simply doesn't work.

Updated at 5.26pm BST

5.04pm BST

Key event

Slovenia Prime Minister Alenka Bratusek (L) and European Commission President Jose Manuel Barroso (R) shake hands as they pose for the media prior to their meeting at the EU Commission headquarters in Brussels, Belgium, 09 April 2013.
Slovenia Prime Minister Alenka Bratusek (L) and European Commission President Jose Manuel Barroso (R) shake hands as they pose for the media prior to their meeting at the EU Commission headquarters in Brussels, Belgium, 09 April 2013. Photograph: JULIEN WARNAND/EPA

Back in the eurozone crisis: here's a couple of stories about this afternoon's meeting between Slovenia prime minister Alenka Bratusek and European Commission President Jose Manuel Barroso.

Dow Jones: Slovenia PM Says Country Does Not Need Bailout

Europolitics: No bailout needed – Slovenian PM

5.02pm BST

Here's our story on James Crosby's decision to hand back his knighthood:

James Crosby to give up knighthood and 30% of pension

4.13pm BST

James Crosby to renounce knighthood and have pension cut

Big news in the UK – Sir James Crosby, the former chief executive of HBOS, has asked the UK authorities to take back his knighthood. He has also asked to surrender 30% of his pension.

This follows the official report into the collapse of HBOS in 2008, which was published last week, and was extremely critical of the bankers who ran the bank.

Here's the full statement:

A personal statement from James Crosby

Friday's report from The Parliamentary Commission on Banking Standards made for very chastening reading. Although I stood down as CEO of HBOS in 2006, some 3 years before it was taken over by Lloyds, I have never sought to disassociate myself from what has happened.

I would therefore like to repeat today what I said when I appeared in public before the Commission in December; namely that I am deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general.

Shortly after I left HBOS, I received the enormous honour of a Knighthood in recognition of my own – and many other people's – contribution to the creation of a company which was then widely regarded as a great success. In view of what has happened subsequently to HBOS, I believe that it is right that I should now ask the appropriate authorities to take the necessary steps for its removal.

During the course of my 30 year career, including 12 years at Halifax and HBOS, I both contributed to and built up a substantial pension entitlement. This pension entitlement is entirely contractual in nature. However I have decided to forego 30% of my gross pension
entitlement payable to me during the rest of my lifetime*. I will be discussing how this reduction is implemented, and whether the amount waived should go to support good causes, or benefit shareholders, with the pension scheme's employer and trustees.

It is with great personal sadness that I have decided to stand down from my voluntary position as a Trustee of Cancer Research UK. They do remarkable work and it has been a great privilege and pleasure to have played my part. However I want to put their interests firmly before mine and would wish them every success in the future.

Throughout my business career I have always tried to act with integrity and to the best of my abilities. I have had the enormous privilege of working with people and organisations about whom I cared deeply. I would like to express my sincere regret for events and my appreciation for the personal support I have been shown.


* The current annual pension payment amounts to c£580,000 per annum.

Updated at 4.14pm BST

3.34pm BST

Slovenia's PM also argued that the creation of a bad bank this summer would help address its problems.

Alenka Bratusak said she was aware that Slovenia's banking problems needed to be fixed (as the OECD identified today – see 9.04am)

Bratusek also warned, though, that balancing the country's budget may take longer than previously hoped.

Reuters has the quotes:

It is too optimistic to expect Slovenia to reach a balanced budget by 2015, the country's prime minister said on Tuesday.

"I personally have a problem with the fact that the date 2015 is mentioned in the constitution for the final consolidation of Slovenian public finances," Alenka Bratusek told journalists after meeting the President of the European Commission, Jose Manuel Barroso.

"I think this is too optimistic regarding the current economic situation and the current level of the deficit. But the consolidation of public finances is certainly one of our three priorities." She also said that fresh capital for the country's banks would be one of her government's first steps.

And as flagged up at 3.14pm, Bratusek insisted that a bailout is not needed.

3.23pm BST

Barroso: don’t compare Slovenia with Cyprus

Jose Manuel Barroso
Photograph: EC

European Commission president Barroso has firmly rejected any suggestion that Slovenia might see a repeat of the Cypriot bailout, in which large depositors were 'bailed in' to the rescue package.

Asked by the FT's Peter Spiegel if he had a message for savers in Slovenia, Barroso replied that he would "not engage" in any comparison with Cyprus.

It is a completely different situation in Cyprus and in Slovenia.

Barroso adding that it would be "abusive" to make a comparison between the two countries (Cyprus's banking sector being so much larger, as a percentage of its national GDP, than Slovenia's).

Updated at 3.47pm BST

3.18pm BST

Barroso: ‘no indication’ Slovenia will need a bailout

Barroso also told the press conference that there was "no indication" that Slovenia would require an aid package.

There's plenty of interest in the issue though — apparently Slovenia is getting more attention from the Brussels press pack than usual:

3.14pm BST

Slovenian PM Alenka Bratusek has insisted that her country is "strong and stable", and urged people to look at the "facts":

3.12pm BST

Key event

José Manuel Barroso told journalists at the press conference in Brussels that Slovenia faces a 'very demanding task' on reforms, but said he was confident it would achieve it.

He explained that Prime minister Bratusek had told him Slovenia has a "very strong commitment" to making the necessary reforms so that a bailout is not needed.

Barroso added that Brussels wants to see details of Slovenia's future reform plans, for its banking sector and the wider economy.

I'm confident that those reforms will be adequate…to pave the way to an economic recovery.

3.02pm BST

Alenka Bratusek, Prime Minister of Slovenia,
Alenka Bratusek, prime minister of Slovenia, speaking at this afternoon’s press conference in Brussels.

2.58pm BST

Alenka Bratusek, the prime minister of Slovenia, is giving a joint press conference with José Manuel Barroso, president of the European Commission now.

It's being streamed here.

Highlights to follow….

2.36pm BST

The International Monetary Fund is discussing the analytical data behind its World Economic Outlook at a press conference now – it's online here.


John Simon, senior economist at the IMF, told this afternoon's press conference that we're not likely to see a repeat of the inflationary 1970s.

He cited three factors; central banks are more 'credible' than in the '70s, public inflation expectations are lower, and there's a flatter Philips curve today (a measure of how prices rise in relation to falling unemployment)

Updated at 7.40pm BST

2.32pm BST

Slovenian bond auction results

Slovenia saw its borrowing costs rise, and sold less debt than hoped, at a bond auction today.

The OECD's warning over its banking sector, and speculation that it may require a bailout, may be hitting investor confidence.

Slovenia sold a total of €56m of debt, compared to a maximum total of €100m (it received offers for around €80m, but decided not to take the most expensive bids).

The yield on €32.3m of six-month bills rose to 1.7%, from 1.5% in an auction in March.

The yield on €23.8m of 12-month bills rose to 2.99%, up from 2.02% in February.

Updated at 2.32pm BST

1.49pm BST

Angry Cypriot MPs suspend probe into bank transfers

In Cyprus, a parliamentary probe into allegations that some wealthy depositors managed to whisk their money out of the country before accounts were frozen last month has been suspended.

MPs blasted the country's central bank, saying it had only supplied half a month of transactional data, not the year's worth it had asked for.

Reuters explains that deputy central bank governor Spyros Stavrinakis sent the MPs the limited amount of data in a list.

The head of the Cypriot parliament's ethics committee, which was due to look into a list detailing transfers of more than €100,000 from the two major banks – Bank of Cyprus and Cyprus Popular Bank – said on Tuesday that the list fell short of what he had requested.

"It was with great disappointment and anger that, when we opened the envelope, we realised it contained data for only 15 days even though we had asked for a year," lawmaker Demetris Syllouris told reporters. "This kind of behaviour is unacceptable."

In a letter to Syllouris, then central bank deputy governor Stavrinakis said he was only attaching a list of individuals and companies who transferred money out of Cyprus between March 1-15 this year.

"We believe your request would lead to a huge volume of information, which would possibly not help the aim of your committee," Stavrinakis said. This included foreign companies that transfer large sums of money each day, as well as Cypriots who bought property, he said.

Stavrinakis had been appointed by the previous government earlier this year. In another twist today, that appointment was reversed by the current administration.

Updated at 1.49pm BST

1.05pm BST

Austerity already underway in Slovenia

Slovenia is already going through an austerity programme – or a "front-loaded and mainly expenditure-driven consolidation", as the OECD style guide puts it.

Here's the details:

The generosity of social transfers was reduced. Subsidies for school and student meals were lowered, parents were required to cover 30% of childcare costs for the second child, the parental benefit for child care and nursing was cut, the indexation of child benefits was frozen and eligibility conditions were tightened for higher- income earners.

However, cuts in nominal public sector wages were 5%, somewhat less than what had been announced initially due to earlier commitments to increase wages.

Measures on the revenue side include, among others, a new tax on immovable property, a new higher marginal personal income tax, and increased taxes on motor vehicles.

Further cuts to wages, pensions and unemployment benefit are already 'pencilled in' for the next two years, the OECD adds (see page 17 of today's report for more).

12.36pm BST

Slovenia’s bad loan problem explained:

The OECD's report into Slovenia (pdf) paints a gloomy picture of a country badly hit by the financial crisis, and heading deeper into trouble.

The country's economy, for example, is enduring a double-dip recession, which has driven unemployment over 10% at a 14-year high:

Slovenian GDP & unemployment rates
Photograph: OECD (page 6 of today’s report)

This economic decline has driven up the amount of bad loans on the country's banks (The OECD criticises Slovenia's banks for being rather too lax about risk during the good times):

Slovenian banks are ranked fourth on this chart for bad debts, behind Greece, Ireland and Hungary (interesting to see Italy in 5th place too)

Nonperforming loans at Slovenian banks
Photograph: OECD (page 10 of the report)

Around 14% of loans on Slovenia's bank balance sheets are classed as 'non-performing' (as in at least 90 days in arrears). That is likely to get worse, the OECD says:

As the recession drags on, this is likely to deteriorate further.

The situation is particularly worrying in the non-financial corporate sector, where non-performing loans (NPLs) reached 24% of the portfolio. Construction companies are responsible for a large share, as 62% of their loans are overdue for more than 90 days and the largest companies are

The quality of the loan portfolio has deteriorated the most for large state-controlled banks, whose NPLs to private firms amount to 30% of their total loans to these firms in October 2012 (Figure 3, Panel B). In comparison, foreign banks in Slovenia have a NPL ratio of only 11% of their lending to private firms, suggesting that an increase in bad loans of state-controlled banks reflects not just the business cycle but also deeper governance problems.

12.09pm BST

Read OECD’s Slovenia report

The OECD has uploaded its report on Slovenia – you can see it here: Economic Survey of Slovenia 2013.

Here's the top line:

Slovenia has been hit hard by a boom-bust cycle, compounded by reform backlogs and the euro area sovereign debt crisis. The reduction of public and private sector indebtedness is significantly weighing on growth amid tight financial conditions, growing unemployment and stalling export performance. Although important reforms have been adopted in 2012 and early 2013, additional and far-reaching reforms are needed as soon as possible to restore confidence and head off the risks of a prolonged downturn and constrained access to financial markets.

And here are the key bulletpoints:

• The economy is in a deep recession.

• Slovenia is facing a severe banking crisis,

• The authorities have adopted an ambitious fiscal consolidation path, but the fiscal position is not yet sustainable.

• Restructuring welfare spending would help achieve fiscal sustainability.

• Potential growth has fallen significantly since the outset of the crisis.

There are some interesting graphics too — which I"ll upload now…

11.49am BST

De Guindos: Spanish slump is slowing

Over in Spain, the economy minister Luis de Guindos has said that economic output, which has been in shrinking steadily since mid-2011 fell again in the first quarter, but hinted the worst was over.

Martin Roberts reports from Madrid:

De Guindos estimated the drop in gross domestic product at 0.5-0.6%, ahead of official figures due out later this month.

“We are still in negative territory, but it should be recalled that the fourth quarter of 2012 – when GDP contracted by 0.8% — was the worst of the second dip,” he told a business conference, referring to Spain’s second recession since the economy entered crisis in 2008.

The government predicts the recession will bottom out later this year and the economy will grow again in 2014, but several economists are sceptical because demand is so weak.

Rating’s agency Moody’s is also dubious over government forecasts it can trim its deficit to 4.5% of GDP this year, and in a note this morning predicted the gap would actually be 6% in 2013, down from 7% in 2012. That would be someway short of Madrid's target of 4.5%.

Moody kept its 'negative' rating on Spain's bond rating, which at Baa3 is only one notch above junk.

11.15am BST

US Treasury secretary: America needs more growth in Europe

US Treasury secretary Jack Lew is continuing his trip to Europe, where he is pushing politicians and euro officials to adjust their austerity strategy and focus more on growth.

Today he's in Berlin, where he held meetings with German finance minister Wolfgang Schäuble.

They're now holding a joint press conference, where Lew explained that the US is banking on Europe to return to growth:

As we continue to address many of our long-term challenges, our economy's strength remains sensitive to events beyond our shores. We have an immense stake in a prosperous Europe.

Lew then nudged Germany to use its economic muscle to help its weaker neighbours, saying it would be "helpful" if countries with the ability to increase consumer demand did so.

Looking for Schäuble's comments now…

Updated at 11.24am BST

10.59am BST

OECD: no immediate need for Slovenian bailout

The deputy secretary of the OECD has commented on Slovenia's financial situation, saying he sees no 'immediate need' for a financial rescue package.

Yves Leterme made the statement as the OECD presented its new report on Slovenia (see 9.41am)

Reuters has the details:

Slovenia, which is struggling to avoid a bailout, is not in immediate need of an economic rescue, Yves Leterme, deputy secretary general for the OECD, said on Tuesday.

"The government of this country has been able to meet its financial needs without difficulties so far," Leterme said in Ljubljana while presenting a critical economic survey on the euro zone country.

"It was at a relatively high cost (but) as far as we are concerned, there is no reason to anticipate an immediate need for a bailout."

Last month Slovenia had a successful debt auction of €110m of short-term debt, with yields falling. It said in January it hopes to raise up to €3bn this year.

10.11am BST

Britain’s trade gap widens, but industrial production beats forecasts

Britain's trade gap has widened, with exports falling and imports rising in February.

The Goods balance (the gap in value between what is physically shipped in and out of the UK) rose to -£9.416bn, from -£8.16bn in January.

UK trade data to February 2013
Photograph: Thomson Reuters

UK exports fell by 2.8% in February, while imports inched up by 0.3%.

Britain's traditional surplus in invisible items (ie services) meant the total trade gap was £3.64n, up from almost £2.5bn in January.

Not a sign that the UK's 'march of the makers' is proceeding smoothly, as Philip Aldrick, the Daily Telegraph's economic's editor, pointed out:

But in better news: industrial production jumped by 1.0% in February (smashing forecasts of a 0.4% rise) which analysts believe means the economy will have returned to growth this quarter.

But with output still 2.2% lower than a year ago, it's not a great picture.

James Knightly of ING commented:

With the UK’s largest oil and gas field coming back on-stream in March, likely leading to another positive gain in output, we are more optimistic that the UK can avoid its third technical recession in five years.

Updated at 8.00pm BST

9.41am BST

Slovenia’s bailout worries

The OECD's warning to Slovenia (see 9.04am) comes at an awkward time for the country, with speculation over a possible bailout swirling.

As Reuters puts it this morning:

Following last month's messy rescue of Cyprus, the country of 2 million perched on Italy's northeast border is facing intensifying market pressure while seeking funds to heal its state-owned financial sector.

Slovenia's banks, downgraded by Fitch last Friday, are still largely in public hands too.

One of the OECD's criticisms is that the Slovenian government hasn't yet agreed a list of public assets to be privatized or spun off.

Bloomberg explains:

“Limited equity markets and the backlog in the privatization program are hindering foreign direct investment, whose increase would help smooth corporate deleveraging,” the group of the world’s wealthiest countries said in the report.

“An agreement on a list of public assets to be privatized or managed by a new sovereign holding is still lacking.”

And here's Bloomberg's full story: Slovenia Faces ‘Severe’ Banking Crisis in Recession, OECD Says.

9.04am BST

OECD warns Slovenia over banking debts

The headquarters of Slovenia's second-biggest bank, state-owned NKBM, in Ljubljana.
The headquarters of Slovenia’s second-biggest bank, state-owned NKBM, in Ljubljana. Photograph: JURE MAKOVEC/AFP/Getty Images

The OECD has warned that Slovenia faces the risk of a "severe banking crisis" after calculating that the cost of rescuing its banks could be significantly higher than officially estimated.

In a report just released, the Organisation for Economic Co-operation and Development suggested that the bad debts on the books of Slovenia's banks (mostly state owned) could top the official estimate of €7bn.

Those under-performing loans have fuelled fears that Slovenia, already in recession, might require its own financial aid package.

The OECD didn't pull its punches, saying:

Slovenia is facing a severe banking crisis, driven by excessive risk-taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools.

..and urged the government to recapitalize “distressed, viable banks” quickly, ideally by issuing new shares to investors.

The IMF estimated last month that the government in Ljubljana must inject around €1bn into its banks.

Worryingly, the OECD fears that the methodology used to calculate the bad debts on the Slovenian banking sector was "weak and non-transparent", so can't be relied upon:

Capital needs are uncertain and could in fact be significantly higher.

And the OECD was also gloomy about Slovenia's economic prospects – it expects GDP to shrink by 2.1% this year.

Against this difficult background and with a possible further deterioration in the international environment, Slovenia faces risks of a prolonged downturn and constrained access to financial markets.

Which is all likely to increase talk that Slovenia will become the next eurozone nation to seek help.

Reuters adds that the OECD also wants the Slovenian government to make a series of economic reforms:

It recommended Ljubljana increase the powers of the competition office, gradually raise the pension age, wean wealthier citizens off family benefits, cut unemployment and other benefits and improve efficiency in education and healthcare.

The report is being presented in Ljubljiana this morning, so we should have a response from the Slovenian government shortly.

Updated at 9.18am BST

8.54am BST

The latest industrial data from the Netherlands isn't too encouraging either, falling by 1.7% in February compared with a year ago:

8.33am BST

The agenda

Here's a few things to watch out for today:

• OECD report into Slovenia – 8.30am BST (details to follow!)

• Netherlands industrial production data for February – 8.30am BST

• UK industrial production data for February – 9.30am BST

• IMF releases analytical chapters of World Economic Outlook – 2.30pm

• George Soros gives a lecture in Frankfurt on Europe – 4.30pm BST

Updated at 8.34am BST

8.17am BST

German imports and exports slide…

Good morning, and welcome to our rolling coverage of the eurozone financial crisis, and other key events in the world economy.

First up, some disappointing economic data from the eurozone's two largest economies, France and Germany.

German exports and imports both fell unexpectedly in February, in a sign that the eurozone recession may have bitter harder last winter.

Exports from Germany slid by 1.5% in February, while imports took a 3.8% tumble.

It could just be a blip – or it might be more serious.

Christian Schulz of Berenberg Bank sums it up (via Reuters):

After quite a strong January, February went worse. China could have played a role: the new year celebrations fell into February, which temporarily weighed on exports there

The situation for German exporters remains tense. The euro zone remains in recession. That should dampen demand for German products for some time. Business with the U.S. and China is going significantly better. But temporary weak phases there therefore carry more weight.

In terms of the surprisingly strong fall in imports, one will have to see whether it is is a temporary effect caused by the long winter or whether the euro crisis is unsettling consumers.

Alexander Koch of Unicredit is more optimistic, though, suggesting optimism in the global economy will help exports.

We get UK and Netherlands industrial data later this morning too, which should help explain what's going on.

The news from France isn't too encouraging either. The French adjusted trade balance widened to -€6.01bn in February, from -€5.65bn in January (imports and exports were both down).

But the Bank of France remains hopeful that the country dodged recession — sticking to its forecast that GDP rose by 0.1% this quarter.

This splurge of economic data comes as Portugal wrestles to find the savings demanded by its international lenders. Government ministers should be meeting later today to discuss the latest planned cutbacks.

I'll be tracking the latest developments in Portugal, as well as watching Cyprus, Greece and Slovenia — seen by some as the latest eurozone country which might need more support….

Updated at 8.19am BST

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