May 7 2013

Dijsselbloem answers questions on Cyprus debacle. Moscovici says economic growth is now the priority after French industrial output falls by 0.9% m/m. Politicians spar after Australia rate cut. German factory output beats forecasts…


Powered by article titled “France hails austerity rethink as Dijsselbloem issues bank stress-test warning – as it happened” was written by Graeme Wearden, for on Tuesday 7th May 2013 17.39 UTC

6.17pm BST

Closing summary

Time to wrap up for the day. Here's a brisk closing summary:

France's finance minister, Pierre Moscovici, has welcomed the EC's decision to relax its deficit targets. On a visit to Berlin, Moscovici said Europe had reached a turning point, and was now embracing a growth-friendly "doctrine of positive deficit reduction".

With France now getting until 2015 to bring its deficit below 3% – a two-year extension – there was also little sign of the tension that has tarnished relations between Europe's two largest economies.

Germany's Wolfgang Schäuble told reporters that the two countries were united in seeking "sustainable growth", based on "solid public finances". See 3.31pm for details and photos.

The head of the Eurogroup has warned that Europe's banks may still be hiding undeclared bad debts. Jeroen Dijsselbloem said it was important that new instruments are created to handle bank recapitalisations, and to close a bank down if needed. The comments raised fears that large depositors could face losses once the single supervisory mechanism is created.

See 10.52am for details, and 5.53pm for possible implications for UK savers with accounts in the eurozone.

Jeroen Dijsselbloem also clashed with MEPs today, after refusing to reveal full details of how the Cyprus bailout package was finalised. 

He also defended the country's unprecedented capital controls as unfortunate but necessary to avoid the disaster of a bank run, and blamed Cyprus's plight on its failure to regulate its banks properly (see 1.54pm onwards).

Australia became the latest country to ease its monetary policy, with a quarter-point cut in interest rates. The move led to point-scoring between the country's policians (see 8.31am for details, and 12.38pm for the row)

There were mixed economic signals from the eurozone. France's industrial output fell by 0.9% in March (see 8.50am), but German factory orders rose by 2.2% (see 11.53am).

Slovenia's race to avoid a bailout took another twist. A parliamentary vote on imposing a deficit cap was delayed after politicians failed to agree details (see 4.50pm).

And there was relief in Portugal, and Brussels, as the country's first 10-year bond sale since it applied for a bailout attracted strong demand (see 4.16pm).

I"ll be back tomorrow. Until then, thanks and goodnight.

Updated at 6.17pm BST

6.16pm BST

Photos: Madrid medical staff strike against privatisation plans

A health worker wears a black armband which reads, “R.I.P. our job”, as others perform mock doctor consultation sessions during a protest against the local government’s plans to cut public healthcare spending outside Infanta Leonor hospital in Madrid today. Photograph: SERGIO PEREZ/REUTERS

The sign, at Infanta Leonor hospital in Madrid, reads, “Your health is their business.” Photograph: SERGIO PEREZ/REUTERS

Thousands of medical staff in Madrid have held a 24-hour strike today, in protest at plans to privatise hospitals as part of the government's austerity programme.

It's the first in a series of planned walkouts, in an attempt to block the regional government's plan to tender the management of six public hospitals to private companies.

Doctors and nurses also held an unofficial referendum, asking members of the public to vote on whether they supported or opposed the sale:

The protest shut down all but urgent care in 34 hospitals and dozens of health centres in the autonomous community of Madrid, according to Reuters, which adds:

"This will affect the quality of service at these hospitals, without a doubt," said Susana Hernandez, 45, doctor of internal medicine at one of the hospitals on the target list. "They move the flow of patients to benefit the privatised hospitals, while the companies' first priority is always profit. We've asked for their figures to show how much they'll save, but their stats show this sale is a bargain (for the companies)."

Doctors and nurses ask bypassers to vote 'yes' or 'no' to the privatization of Spanish Health system during a non binding popular referendum outside La Princesa Hospital in Madrid, Spain, Tuesday, May 7, 2013.
Doctors and nurses ask bypassers to vote ‘yes’ or ‘no’ to the privatization of Spanish Health system during a non binding popular referendum outside La Princesa Hospital in Madrid, Spain, Tuesday, May 7, 2013. Photograph: Daniel Ochoa de Olza/AP
Doctors and nurses ask by passers to vote 'yes' or 'no' to the privatization of Spanish Health system during a non binding popular vote referendum outside La Princesa Hospital in Madrid, Spain, Tuesday, May 7, 2013.
Photograph: Daniel Ochoa de Olza/AP

Updated at 6.39pm BST

5.53pm BST

Should UK savers be worried?

Over in the Daily Telegraph, Bruno Waterfield reckons that British savers may be alarmed by Jeroen Dijsselbloem's comments today about the need to scrutinise Europe's banks for bad loans (see 10.52am)

He writes:

Uninsured depositors and bondholders in eurozone banks could face imposed losses following stress tests carried out before a “single-supervisory mechanism” headed by the European Central Bank begins work next June.

Jeroen Dijsselbloem, the chairman of eurozone finance ministers, warned that that the ECB checks on the quality of banking assets could lead to banks being shut down, highlighting the need for eurozone agreement on bank resolution rules this summer.

The prospect of eurozone banks facing closure will alarm British expatriates who live and have transferred their savings, proceeds from house sales and other assets to eurozone bank accounts in countries such as France, Spain and Italy.

Of course, we don't know what nasties those stress tests might throw up and Dijsselbloem was also pretty insistent that insured depositors (with less than €100,000) should be protected if a bank fails.

But City analysts do fear that certain Eurozone banks haven't accepted the full scale of the bad debts on their books. These stress tests could make for a lively summer…..

Bloomberg also has a good write-up about the state of play in European banking regulation: Dijsselbloem Says EU Needs Common Deposit Backstop in Long Run

5.06pm BST

DAX hits record high as European markets close

A broker is seen in front of the German Stock Market Index DAX  at the stock exchange in Frankfurt, Germany, on May 7, 2013.
A broker at the German stock exchange today. Photograph: DANIEL ROLAND/AFP/Getty Images

Germany's DAX index has closed at a new lifetime high, on another day of rising stock markets.

In London the FTSE 100 also finished at a five and a half-year high, despite security firm G4S tumbling almost 15% after warning its profit margins were under pressure (story here)

Here's the closing prices:

• German DAX: up 69 points at 8181, +0.8%

• FTSE 100: up 35 points at 6557, + 0.55%

• French CAC: up 14 points at 3921, +0.37%

• Spanish IBEX: up 40 points at 8544, + 0.47%

• Italian FTSE MIB: up 258 points at 17121 + 1.5%

Joshua Raymond, chief market strategist at City Index, explains that the current loose monetary policy means investors can shrug off disappointing news (like this morning's weak French industrial production) while being cheered by any optimistic developments (Germany's forecast-busting factory output).

The stimulus actions of the world’s central banks have acted as an efficient stop loss against bearish fluctuations. This has turned bad news into good news and good news into great news.

Investors have viewed heavy price weakness as buying opportunities and as long as that continues, market trends are maintained with large support. Investors have so far turned a blind eye to when 'the central bank music stops' meaning that right now, the risks of missing out on equity moves higher are greater than being caught long the market during violent price corrections. This risk on appetite continues to support equities.

UK, US and German sovereign debt all fell in value today, pushing up yields, which also suggests investors were moving from bonds into shares.

Updated at 5.24pm BST

4.50pm BST

Slovenia postpones deficit cap vote

The Slovenian govenrment has postponed a parliamentary vote on a proposal to create a deficit cap until the end of May, amid ongoing deadlock with the opposition.

With the threat of a bailout looming, Slovenia had promised to set the borrowing cap this month, but it's political parties can't agree the details – including when it should be implemented.

The disagreement comes as Alenka Bratusek, Slovenia's new PM, tries to finalise the details of an economic reform plan, due for release on Thursday.

Reuters has more details:

The fiscal reform entails changing the constitution, which requires a two-thirds majority in parliament.

The centre-left government coalition controls 49 out of 90 parliamentary seats.The postponement could sow further doubt over the ability of Prime Minister Alenka Bratusek's government to push through unpopular reforms to stabilise the country's finances and stop it becoming the latest member of the 17-nation currency bloc to need a bailout.

The government is due to unveil a reform package on Thursday, but investors are doubtful of its readiness to cut spending and reduce the level of state ownership in the economy. It bought some breathing space last week when it managed to issue two bonds to a joint value of .5 billion on Thursday, while government sources told Reuters on Monday the country plans to sell its second largest bank Nova KBM NKBM.LJ KBM.WA and telecoms operator Telekom Slovenia TLSG.LJ this year to raise budget income.

The vote is now expected to be held between May 20 and 24, assuming the various parties reach an agreement. Bratusek's government wants the cap imposed from 2017, but the opposition favours 2015.

4.16pm BST

Portuguese bond auction cheers Brussels

There is relief in Brussels after Portugal saw strong demand for a new 10-year €3bn bond which went on sale this morning.

Yves Mersch, Luxembourg's top central banker, declared this afternoon that the auction was an 'enormous succes', and showed investors supported Portugal following its tough austerity programme.

The head of Portugul's debt agency revealed this morning that it had received €9bn-worth of orders, and City insiders reckon it was priced at an interest rate of around 5.6%.

The successful debt auction indicate that Lisbon may be able to return to the financial markets when its bailout programme ends this year.

But it also looks like another sign that traders are increasingly desperate to find yield — with safe-haven debt like US Treasuries and German Bunds offering such meagre returns today.

Over the weekend Portugal announced another raft of public spending cuts, including 30,000 layoffs across the civil sector, in a bid to keep its austerity programme on track.

Sony Kapoor of the Re-Definte think tank reckons it's too early to be celebrating:

Updated at 4.18pm BST

3.52pm BST

Another interest rate cut, this time in Kenya, where the central bank has sliced a whole percentage point off borrowing costs, to 8.5%.

The Central Bank of Kenya cited the eurozone's financial problems as one reason for the bigger-than-expected cut, along with falling inflation.

In a statement, it said:

The Committee noted that the persistent strain in the eurozone coupled with the balance of payment pressures attributed to the high current account deficit, currently estimated at 11.4 percent of GDP, remain threats to the macroeconomic outlook.

3.31pm BST

Photos: the Franco-German Finance and Economic Council

Here's a few photos from the 25th anniversary of the Franco-German Finance and Economic Council today, where French finance minister Pierre Moscovici claimed Europe was changing its approach to austerity by relaxing France's deficit targets (as covered at 11.17am).

Bank of France Governor Christian Noyer, France's Finance Minister Pierre Moscovici, Germany's Finance Minister Wolfgang Schaeuble, German central bank (Bundesbank) President Jens Weidmann and state secretary at the German Finance Ministry Ernst Burgbacher (L-R) pose for a group picture.
Bank of France Governor Christian Noyer, France’s Finance Minister Pierre Moscovici, Germany’s Finance Minister Wolfgang Schaeuble, German central bank President Jens Weidmann and state secretary at the German Finance Ministry Ernst Burgbacher (L-R) pose for a group picture. Photograph: TOBIAS SCHWARZ/REUTERS
Germany's Finance Minister Wolfgang Schaeuble (L) and France's Finance Minister Pierre Moscovici shake hands during a news conference after a meeting in Berlin May 7, 2013, to mark 25th anniversary of the Franco-German financial and economic council.
German Finance Minister Wolfgang Schaeuble (left) and French Finance Minister Pierre Moscovici chatting after speaking to the media. Photograph: TOBIAS SCHWARZ/REUTERS

And here's AP's latest take, by Juergen Baetz.

French Finance Minister Pierre Moscovici on Tuesday hailed the European Union's decision to grant his country more time to tackle its deficit as a turning point in the region's approach to austerity, which is choking off growth through spending cuts and tax hikes.

Cutting budget deficits remains important but the 27-nation bloc must now move toward a more growth-friendly "doctrine of positive deficit reduction," Moscovici said, speaking at a Berlin university alongside his German counterpart, Wolfgang Schaeuble.

That means tightening the budget when the economy is stronger and easing off the cuts in times of weaker growth, such as now.

The EU Commission, the bloc's executive arm, hinted Friday that it will grant France two more years to get its deficit below the limit of 3 percent of annual output to account for the current economic downturn.

Otherwise, Paris would have had to resort to more drastic measures "either in the form of more taxes or in the form of yet bigger cuts which would have been absolutely harmful for the French economy," Moscovici said.

EU countries have focused on debt reduction as the main policy to restore market confidence in the region's public finances over the past three years. But the spending cuts and tax increases have been hurting the economy and proved less effective at reducing deficits than initially thought. As economies shrink, so do their tax revenues, potentially making it harder to close budget gaps.

Moscovici said France does not view the additional time the EU has granted it as an incentive to slow down the pace of its structural economic reforms, saying "it's not an invitation to laziness."

"France is a serious country, conducting credible policies," Moscovici added.

German Chancellor Angela Merkel and Finance Minister Schaeuble have so far championed a course of budget tightening and structural reforms to overcome the eurozone's debt crisis, insisting in many cases on austerity measures that deepened the recession in crisis-hit nations like Greece, Portugal or Spain.

"I know that the decision (by the European Commission) has raised questions in Germany," Moscovici acknowledged. But he stressed that it is in Germany's own interest that France, the bloc's second-largest economy, returns to growth.

"We need a strong France," he said, noting that only France and Germany together can push European integration forward. The two nations together count for almost half of the eurozone's population and its economic output.

"We are not everything in Europe, but without Germany and France nothing advances in Europe," Schaeuble added.

Schaeuble called the European Commission's decision on France "appropriate" and insisted that it was a misunderstanding to think Europe was divided, with some governments seeking austerity and others growth.
"We have always said we jointly want sustainable growth, for which solid public finances are a precondition," he said.

The bloc must make it a priority to fight unemployment, and youth unemployment in particular, or the EU stands the risk of "losing legitimacy and credibility," he said.

The eurozone overall is stuck in recession and unemployment is expected to hit an average of 12.2% this year, up from 11.4% in 2012.

3.04pm BST

Europe, and Britain's place in it, has dominated the political scene today after former chancellor, Lord Lawson, called for the UK to quit the EU.

Lawson's claimed that David Cameron will fail to win new concessions from the rest of Europe, meaning the PM's plan for an In-Out referendum could see many of his own side campaign for an exit.

His intervention comes just a few days after the UK Independent Party made strong gains in our local council elections.

My colleague Andrew Sparrow has been tracking all the reaction to Lawson's intervention in Politics Live today – here's his lunchtime round-up.

2.44pm BST

Dijsselbloem: small savers shouldn’t worry

A couple more interesting lines from Eurogroup president Jeroen Dijsselbloem's appearance before the European Parliament (see 1.54pm onwards).

He told MEPs that he could 'reassure' savers that deposits up to €100,000 were safe, and that Cyprus was not a template (a touchy subject) for future bailouts.

Dijsselbloem also predicted that many European countries will return to growth in the second half of 2013. Thus it's important to repair Europe's a banks now, so they can offer credit to sustain that growth, he argued.

That might be too late, though, suggests Matina Stevis of the WSJ:

2.12pm BST

Dijsselbloem: blame Cyprus, not us

Jeroen Dijsselbloem also insists Cyprus brought its current grief on itself, telling MPs that the country's problems were not caused by Europe, but by a "badly run financial sector".

The Eurogroup president also declared that the final Cyprus rescue package is "the best possible way" to tackle the situation.

Another MEP asks Dijsselbloem whether he actually believes the debt sustainability report drawn up for Cyprus, given the huge damage done to its banking sector.

After an "ah" and an "ummm", Dijsselbloem replied that he relies on the EC and IMF's economic forecasts.

2.04pm BST

Dijsselbloem won’t name names over Cyprus fiasco

Jeroen Dijsselbloem is refusing to answer detailed questions over exactly how the Cyprus debacle came about.

Several MEPs on the Economics and Monetary affairs committee are demanding to know who said and did what, when, in the top-level Eurogroup negotiations in March that led to the first Cyprus deal (in which all savers were to be taxed).

With MEPs sounding increasingly unimpressed, the eurogroup president said:

I'm very sorry that you find it unacceptable, but I won't do that.

Dijsselbloem also denied actiing like a 'king' by refusing to reveal details of the negotiations:

I'm no king – we've just installed a king in Netherlands, one king is enough.

Dijsselbloem was also given a blast by Sylvie Goulard, MEP, who accused him of acting like an "optimistic undertaker":

1.54pm BST

Watch Dijsselbloem on Cyprus

Jeroen Dijsselbloem
Jeroen Dijsselbloem Photograph: /European Parliament

This is a better link to watch Jeroen Dijsselbloem facing questions about Cypus at the European Parliament's Committee on Economic and Monetary Affairs.

Dijsselbloem has told MEPS that there has been little, if any, direct fallout from the Cyprus bailout on the rest of the eurozone — ie, no bank runs.

The eurogroup president also insisted that the capital controls being enforced in Cyprus were "very unfortunate", but also "inevitable", to avoid banks in the country collapsing.

And he's reiterating his points from this morning that Europe needs a proper 'resolution mechanism' for failing banks.

Updated at 3.34pm BST

1.44pm BST

Migration into Germany has hit a 17-year high, after 1.08 million immigrants arrived in the country last year.

The Federal Statistics Office reported a big jump in the number of people arriving from Southern Europe — with Spanish immigrants up 40%.

But, the total numbers moving from the eurozone periphery remained low, with 34,109 arriving from Greece (up around 10,000) and 29,910 from Spain (up around 9,000), plus an extra 4,000 from Portugal and 12,000 from Italy.

Thanks to regular reader/commenter RobertSchuman for flagging up the figures, and pointing out:

I am very surprised that the numbers remain that low. The German demographics report released last week stated that Germany needs 6 mio. immigrants in the next 12 years and calls for measures to improve support to immigrants.

The data also showed that over 176,000 people arrived from Poland, and around 116,000 from Romania.

1.17pm BST

Schäuble: Germany and France will defend euro together

Heads-up (2). Wolfgang Schäuble and Pierre Moscovici are giving a press conference in Berlin now.

The German finance minister declared that Germany and France will stand together to defend the eurozone, and also told the media that he had confidence in the French government, and the European Commission.

(newsflashes via Bloomberg).

More to follow shortly

Updated at 1.18pm BST

1.08pm BST

Heads-up (1): Jeroen Dijsselbloem is about to be questioned by MEPs over the Cyprus bailout (see Matina's tweet for the link).

Updated at 1.21pm BST

12.52pm BST

FTSE 100 hits 5 1/2-year high

The FTSE 100 has reached its highest level since December 2007, the early days of the financial crisis.

Hot on the heels of the German Dax's all-time high (see 10.21am), London's blue-chip index rose 30 points to 6552. It was helped by the news that HSBC had doubled its profits in the first three months of 2013 (more here)

Chris Beauchamp, market analyst at IG, explained:

Once again the ‘world’s local bank’ is reaping the reward of its focus on emerging markets rather than the moribund European economy, with Chinese growth expected to increase during the rest of this year.

Updated at 12.52pm BST

12.38pm BST

Australian interest rate cut sparks political row

Australia's overnight interest rate cut (see 8.31am) sparked a merry political spat betwen the government and the opposition.

Treasurer Wayne Swan got the ball rolling by pointing out that headline borrowing costs were now lower than under the previous government,

A family with a 0,000 mortgage is now paying 00 a year less than in 2007, when John Howard's government left office, Swan told reporters, adding that:

There will continue to be big savings flowing through to families and of course small business.

But the rate cut looked quite different to shadow treasurer Joe Hockey, who warned that the Reserve Bank of Australia (RBA) was having to pull the monetary levers because of fiscal policy failures:

Hockey told reporters:

The Reserve Bank is endeavouring to do the heavy lifting on the economy that the government is failing to do

We now have a budget in chaos, we have got a government in chaos, but we have got a Reserve Bank that is prepared to step up to the mark and try to provide some economic leadership.

Meanwhile the Australian dollar fell to a two-month low against the US dollar.

11.53am BST

Strong German factory data eases recession fears

German factory orders in March have smashed forecasts , jumping by 2.2% last month compared with February.

Economists had expected a 0.5% drop, as Germany felt the impact of the eurozone recession. But the sector actually saw a rise in exports (+2.7%), driven by demand from other euro countries (+4.2%). Domestic orders were up 1.8% during March.

Rainer Sartoris of HSBC Trinkaus told Reuters that the figures should calm fears that Germany's economy shrank in the last quarter:

The recovery is on its way. We have had two consecutive strong increases now.

In the City, Steve Collins, global head of dealing at London & Capital Asset Management, agreed that the figures were a fillip for Germany:

11.38am BST

Netherlands wants help on deficit target too

The Netherlands is looking enviously at France's two-year extension to its deficit targets.

Finance minister Jeroen Dijsselbloem told reporters this morning that he'd like a one-year extension (reports Matina Stevis of the Wall Street Journal):

Last week the EC predicted that the Netherlands deficit would breach the 3% target, at 3.6% of GDP both this year and in 2014.

That suggests that the Netherlands must either make further cutbacks, or be allowed to miss the target (or simply breach it without 'permission').

A one-year extension would give the Netherlands until 2014 to trim its annual government borrowing below 3% of GDP.

Updated at 12.08pm BST

11.17am BST

Pierre Moscovici welcomes easing of austerity demands

German Finance Minister Wolfgang Schaeuble, right, speaks as he poses for a family photo with his counterpart from France, Pierre Moscovici, left, as part of the 25th meeting of the German French Finance and Economy Council in Berlin, Germany, Tuesday, May 7, 2013.
French finance minister Pierre Moscovici, left, and his German counter part Wolfgang Schäuble, right, today.Photograph: Michael Sohn/AP

France's finance minister has declared that Europe has turned a corner in its approach to austerity, during a high-profile visit to Germany today.

Pierre Moscovici welcomed the news that the EU would grant the French government two more years to get its deficit in line, claiming it was a sign of a shift away from fiscal cutbacks in favour of growth.

Moscovici said Europe was now moving towards a "doctrine of positive deficit reduction," where economic recovery was the main priority. He insisted that France had not given up on controlling its debts — even those its deficit is forecast to be higher in 2014 (4.2%) than 2013 (3.9%)

He was speaking at the 25th meeting of the German French Finance and Economy Council in Berlin this morning.

With France sliding into recession, Moscovici insisted it was in Europe's wider interest for the second-largest member of the eurozone to be given until 2015 to hit the EU's target of a 3% deficit.

I know that the decision has raised questions in Germany [but] We need a strong France.

And Moscovici added that France would continue to implement reforms, saying:

France is a serious country conducting a credible policy…

Of course, we have to make sure public finances are put right, but you have to carry out this exercise carefully, taking into account the natoinal situations and defining the right rhythm for preserving growth prospects.

Despite the growing tensions between Paris and Berlin, German finance minister Wolfgang Schäuble agreed that the two countries must remain close:

10.58am BST

Jeroen Dijsselbloem's media team have now tweeted the main points from his appearance of this morning's session on the future European monetary union (see 10.52am):

Updated at 10.59am BST

10.52am BST

Dijsselbloem: We must protect small savers (!)

Back in Brussels, eurogroup president Jeroen Dijsselbloem has been speaking at the Blueprint for a deep and genuine EMU conference (see also 9.38am)

On banking union, Dijsselbloem told the conference that European Central Bank should immediately scrutinise the eurozone's banks when it takes responsibility for the sector this summer.

He warned that undeclared losses on bad debts meant there was still the risk of contamination between European banks

Dijsselbloem also insisted that those with under €100,000 in the bank must be protected under Europe's rules for failed banks (ironic, given he took the blame for the original (swiftly reversed) decision to impose losses on all Cyprus savers in its bailout).

10.21am BST

DAX hits new all-time high

The German stock market just a record high in morning trading, as the DAX gained 47 points to 8160. Other European markets are higher again too.

Traders are upbeat after HSBC reported decent results this morning (the bank beat estimates and almost doubled its pre-tax profits).

There's also ongoing optimism that central banks will maintain loose monetary policy — especially following Australia's rate cut (see 8.31am). Weak economic data (such as this morning's poor French industrial output), don't seem to cause much concern.

Here's the other mid-morning prices:

• FTSE 100: up 19 points at 6540, +0.3%

• French CAC: up 12 points at 3919, +0.3%

• Spanish IBEX: up 52 points at 8556, + 0.6%

• Italian FTSE MIB: up 18 points at 17043, + 1%

10.11am BST

Britain has defied the slowdown in Europe's car sector, with sales up 15% year-on-year in April.

That's via the Society of Motor Manufacturers and Traders, which has hiked its sales forecast for the year by 3%. It's such a contrast with the rest of Europe, where sales were down 10% in March (we don't have April's data yet). (more on this later)

9.38am BST

Barroso: we don’t have all the answers on EMU

José Manuel Barroso is outling his vision for European Monetary Union now, at a conference on the EC's "Blueprint for a deep and genuine EMU"

You can watch the speech here.

Barroso said "the world has moved on" since economic and monetary union was set up, and talked about the implications of not pushing for closer polital union at the same time.

He claimed the crisis was caused by "broken rules" rather than genuinely bad institutions, and argued that the Cyprus bailout would have been less traumatic if banking union had been in place.

Barroso doesn't appear to outline a fresh vision for the eurozone, saying:

We don't have the intention or insolence to think we have all the answers.

and also stated:

Europe will be open and democratic, or it will fail.

Here's some more highlights, via the press pack:

Updated at 9.39am BST

9.01am BST

Coming up today…

The most interesting event today could be the meeting between the French and German finance ministers, to discuss how the two countries can address Europe's financial crisis.

Pierre Moscovici and Wolfgang Schäuble are meeting in Berlin today, with a press conference due around lunchtime.

Relations between the two countries have deteriorated in recent weeks, with France's ruling Socialist party criticising Angela Merkel for her “selfish intransigence", so it could be a tasty event.

Over the weekend Moscovici declared that the "dogma of austerity' was over, so his views on deficit reduction targets should be interesting too.

Other European leaders are also in action today. Here's an agenda, via RanSquawk:

• Moscovici and Schäuble hold press conference: 12.30pm BST

• Olli Rehn and Jeroen Dijsselbloem at conference in Brussels: this morning

• Angela Merkel speaking in Rostock: 14.40pm BST

• Jeroen Dijsselbloem meeting Christine Lagarde at the Hague: 1pm BST

Updated at 9.05am BST

8.50am BST

French industrial output slides

Gloomy economic news from France this morning – industrial output fell by a worse-than-expected 0.9% in March.

The fall was driven by lower production in France's farm and transport sectors, alongside a fall in oil refining, and won't ease fears that Europe's second largest economy is enduring a tough 2013.

Reuters has more details::

The monthly fall, in part an adjustment from a 0.8% rebound in February driven by the restarting of a refinery, was worse than the 0.3% dip predicted by economists in a Reuters poll.

Output over the first quarter in the moribund industrial sector — which makes up about 12% of France's economy — was down 0.4% compared with the previous quarter.

President Francois Hollande is struggling, a year into his term, to fulfil a campaign pledge to pull the industrial sector out of a long slump that is driving a steady stream of layoffs. His government said this week that measures taken so far to boost competitiveness would take time to bear fruit.

Manufacturing output, a measure that excludes water, energy and mining, was down 1.0% in March after a 0.8% rise the previous month, the data from the INSEE statistics office showed.

There was slightly better news for France in its monthly trade data – the deficit narrowed to €4.696bn in March, from €5.645bn in February.

Updated at 10.23am BST

8.31am BST

Bank of Australia joins easing party

Good morning, and welcome to our rolling coverage of the latest events in the eurozone and across the global economy.

Overnight, the Reserve Bank of Australia has become the latest central bank to react to fears of an economic slowdown by cutting interest rates to a record low.

BoA surprised most economists by slashing borrowing costs by a quarter-point, to 2.75%. It cited China's recent slowdown and the ongoing Eurozone recession as reasons to ease monetary policy now.

In a statement, governor Glenn Stevens explained:

The global economy is likely to record growth a little below trend this year, before picking up next year. Among the major regions, the United States continues on a path of moderate expansion and China's growth is running at a more sustainable, but still robust, pace.

Japan has announced significant new policy initiatives aimed at strengthening demand and ending deflation. The euro area remains in recession. Commodity prices have moderated a little in recent months though they remain high by historical standards.

Australia had been booming last year, thanks in part to strong demand for its commodities from China's factories. But the drop in Chinese GDP growth has had a knock-on effect. As Stevens explained, economic growth in Australia appeared to be 'a little below trend' this year, while unemployment was inching higher – to a new three-year high of 5.6%.

But the country is still in relatively decent shape, though. The IMF expects the Australian economy to grow by 3% this year, rising to 3.3% in 2014. And its jobless rate is still just half that of the European Union.

The move comes just a few days after the European Central Bank cut eurozone borrowing costs to a new record low of just 0.5%. In the UK, the Bank of England meets tomorrow for its monthly meeting – to again ponder whether another dose of quantitative easing, or even a rate cut, is needed.

Australia's move helped to sent the Japanese stock market up to its highest level since 2008, with the Nikkei rallying by 3.6%. It was the first day's trading in Tokyo since last Thursday, before the ECB rate cut and surprisingly strong US jobs data on Friday.

As usual, I'll be tracking events through the eurozone and beyond through day (and catching up with key developments yesterday, when we were off-duty for the UK bank holiday)….

Updated at 8.40am BST © Guardian News & Media Limited 2010

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