Greek bailout payment approved; eurozone jobless rate stuck near record high

Eurogroup splits €8.3bn Greek bailout into three parts. Eurozone jobless number falls by just 35,000. Manufacturing growth slows in the euro-area, although French manufacturing beats forecasts. Euro supported against the U.S. dollar ahead of ECB…


Powered by article titled “Greek bailout payment approved; eurozone jobless rate stuck near record high – business live” was written by Graeme Wearden, for on Tuesday 1st April 2014 13.43 UTC

Greece’s finance minister, Yannis Stournaras, has declared that the Athens government has “turned the economy around” after a long battle, but many readers aren’t convinced.

Writing on the Guardian’s Comment Is Free site today, Stournaras insisted that Greece will return to growth this year:

Here’s the piece.

And here’s a flavour:

According to the latest estimates, in 2014 Greece will return to positive rates of growth after six years of deep recession. In the years to follow Greece is expected to experience robust growth rates that will gradually rise.

Confidence is being restored. The economic sentiment indicator has reached the highest level in the last five years. The spread of the Greek 10-year government bond compared with the German bund has fallen below 550 basis points, whereas at the peak of the crisis it surpassed 3,000 basis points. In January, the purchasing managers’ index (PMI) exceeded the threshold of 50, indicating expansion for the first time since August 2009.

That was written before March’s data, released this morning, showed factory activity fell again last month (see 9.24am).

As flagged up at 2.06pm, Brussels also believes Greece will start growing again this year.

But some regular Guardian readers aren’t letting Stournaras get away with too much triumphalism.

Excuse me while I have a minor fit.
Turned around?
Yiannis… mi les psemata.. You’re not in the Vouli now.
First of all.. Unemployment is still the highest in the EU at nearly 28%. Youth unemployment is the highest at nearly 60%. The Greeks wealth fell faster in 2013 than in any other EU country due to price and tax hikes and incomes slashed.
The PMI fell again last month.
The country is still contracting. Greeks are getting poorer. The unemployment levels are unlikely to recover for decades.
The rich still don’t pay any taxes.
The Vouli is till run by a bunch of Oligarchs… whom you have served.
FFS.. cut the crap.

Not that Greece had any easy choices….

Everybody knows that poverty is awful today in Greece. The question is whether not accepting the MoUs and associated loans would have made things better or not.

A level whereby 70% of the 28% of unemployed received no benefit at all.. No income at all. Nothing.

Just on this aspect. When things were better, ie in 2005, what prevented the Greek society of putting in place such a basic safety net? What is your take on the scheme supposed to be generalized in 2015? Not enough? Do you know the municipalities where it is experimented?

Italy’s newish prime minister, Matteo Renzi, is in London today – meeting with prime minister David Cameron now:

Back to Greece, and the EC has released comments made by commissioner Olli Rehn in Athens today.

Rehn told reporters that the Greek economy was ‘stabilising’, and would (at long last) exit recession this year.

We all know how difficult this adjustment has been and how great are the challenges faced by many Greek citizens still today. I would like to take this opportunity of being here in Athens to acknowledge the great efforts made by Greece over the past four years to repair the public finances and build a more sustainable model for growth and job creation.

There was no easy way to resolve the problems confronting Greece in 2010, given the scale of economic imbalances that had built up, over so many years. But what we can say is that European solidarity and Greek determination came together to ensure that a far worse outcome was avoided.

Today, the Greek economy is stabilising and we expect a return to growth and a gradual recovery in employment starting this year. To strengthen this recovery and boost job creation, it will be essential for Greece to continue to embrace economic reforms, maintain sound public finances and facilitate targeted investments. The European Commission will continue to stand by Greece and support Greece in creating the conditions for sustainable growth, as we have until now through the programme and through technical assistance provided by the Task Force for Greece.

The full statement, which also touched on the situation in Ukraine, is here:

Speaking points by Vice-President Olli Rehn at the Eurogroup Press Conference

I failed to flag this up amid the morning data splurge, but it’s worth mentioning now — policymakers at the Bank of England are worried that investors are too complacent about the prospect of interest rates rising.

The warning came from the Bank’s Financial Policy Committee. The minutes of its last meeting, released this morning, show that the FPC is concerned that the markets haven’t priced in the full consequences of exiting the current loose monetary conditions.

Members were concerned that there was a risk that [the] apparent resilience to past developments in advanced economy monetary policy could reinforce risk appetite in a way that did not fully take account of the eventual transition of monetary policy to more normal settings

Investors ‘too relaxed’ about rising interest rates, Bank of England warns

An unexpected departure at Heathrow — chief executive Colin Matthews has announced his resignation.

His six-year stint at the UK’s biggest airport began with the Terminal 5 fiasco, and will end when Terminal 2 has (we hope) been reopened in June.

Heathrow airport boss Colin Matthews resigns after six years

…and here’s Conservative MP Ben Gummer tweeting that the FCA must take action against those payday lenders who lure customers onto ‘extortionate’ rates:

Speaking of the FCA….it has also taken control of payday lenders today, and is expected to take a tough line with an industry accused of profiteering from Britain’s cost of living crisis and driving families deeper into debt.

One trade body reckons 50% of payday lenders could quit the market, once the FCA gets its teeth into them:

Half of all payday lenders could be ‘taken out of the market’


Chancellor George Osborne has piled further pressure on the UK’s City watchdog, the Financial Services Authority, and its chief executive Martin Wheatley.

Osborne has written to the FCA’s chairman to say he is “profoundly concerned” by the way the FCA announced plans for a probe into the UK life insurance industry last Friday.

That botched announcement (which began with an ill-advised leak to the Telegraph), sent share prices crumbling before the regulators (eventually) issued a clarification hours later.

Wheatley toured the radio studios this morning, admitting that it had not been the FCA’s “finest hour”, but insisted he won’t resign……

George Osborne ‘profoundly concerned’ by FCA insurance leak

Heads-up: The controversial Royal Mail privatisation will be discussed in parliament in a few moments.

Shadow business secretary Chuka Umunna has been granted an urgent question, following the National Audit’s revelations that last autumn’s IPO could have raised an extras £750m. Our politics liveblogger Andy Sparrow will be covering it here.

That NAO report (our story is here) has dominated the political sphere today – with unions and some analysts lambasting business secretary Vince Cable for, in their view, botching the float.

Here’s a flavour:

Eurogroup chief Jeroen Dijsselbloem also told reporters in Athens that it is “too early” to say whether Greece will need another aid package.

He also warned French president Francois Hollande that he cannot be given any more time to hit the EU’s debt targets (it already has a two-year extension).

Reuters has the details:


Last night, Hollande issued a plea to Brussels, saying he did not want to make savings that would sacrifice growth (details here)

Brussels, though, has snubbed him. Here’s what Dijsselbloem told the press conference:

“France is aware of its commitments, they were already given more time and more work needs to be done.

I’m sure new French government will be aware of its obligations,”.

Eurozone finance ministers have also postponed a decision on what future aid or assistance Portugal might need, until after this May’s European elections.

Speaking in Athens, Eurogroup president Jeroen Dijsselbloem said that ministers won’t consider Portugal’s exit strategy this month.

He told journalists:

“Portugal’s recovery is strengthening. Stabilisation of the banking sector is progressing

“We will discuss Portugal’s exit strategy at our May meeting.”

The WSJ reported last night that the decision to defer the Portugal question was “a bit messy”, according to one official. Lisbon’s bailout deal ends on May 17, and there are suggestions it could need a precautionary credit line.


The decision to approve Greece’s next bailout payment removes the danger that it wouldn’t have enough money for its next debt repayment, and ends months of brinkmanship between the two sides.

But most of the money will flow quickly back out of Athens, as the FT’s Peter Spiegel points out:

The bailout tranche of €8.3bn divided into three payments comes just in time to help repay a €9bn bond held by the European Central Bank that is due in May.

Peter’s early take is here.

Eurozone gives green light to next Greek bailout payment, in stages

It’s official, Greece will receive its next aid payment, worth over €8bn — but it will be split into three payments.

Over in Athens, eurozone finance minister have agreed that Athens has done enough to earn the next slice of its bailout.

In a statement just released, the eurogroup said it “reiterates its appreciation for the efforts made by the Greek citizens” , and welcomed the news that the bailout programme is “on track”.

However, it is only proposing disbursing €6.3bn right now. The remaining €2bn will be split into two €1bn slices, which will only be handed over if Greece implements further milestones agreed with the Troika.

In a statement, the eurogroup also urged Athens to continue with its reform programme – just days after the government narrowly won a vote over its austerity plans.

The statement is online here – here’s the key section:

The reform process will have to continue in order to enhance the growth potential of the Greek economy by creating job opportunities and a healthy investment environment.

In this context, the Eurogroup welcomes the authorities’ strong commitment to the implementation of a wide range of product (goods and services) market and institutional reforms. Concrete measures to liberalise transport and rental markets and to open up closed professions are being prepared.

Bold and frontloaded cuts in social security contributions are expected to improve competitiveness and boost growth. In addition, the authorities have committed to far-reaching energy market reforms and to enhancing the privatisation of public corporate and real estate assets, which would provide financing to the government while unlocking private investment.

It is also important that continued progress is made in the area of public administration reforms, in order to improve the quality and efficiency of the services that the public sector provides to its citizens, as well as with labour market reforms.

A press conference is underway in Athens now – highlights to follow….


The small drop in European unemployment last month may signal a welcome recovery in the region’s labour market, suggests Howard Archer of IHS Global Insight. He writes:

Eurozone unemployment dipped by 35,000 in February. While this followed a jump of 157,000 in January, it adds to mounting evidence that Eurozone labour markets have stabilized overall and are maybe even starting to see slight improvement after extended, marked weakness.

Eurozone unemployment falls in February, jobless rate steady at 11.9%

Europe’s unemployment crisis has eased a little — with the number of people out of work across the eurozone dropping by 35,000 in February.

The headline jobless rate is better than feared, coming in at 11.9%. Eurostat has also revised January’s figure down from 12% to 11.9%, and now believes the rate has been unchanged since October.

Across the wider European Union, the jobless rate dropped to 10.6%, from 10.7% in January, with the unemployment total falling by 60,000.

That means there are still 18.965m people out of work in the eurozone, and 25.92m across the EU.

But there was little relief in the eurozone periphery — Italy’s jobless rate hit a fresh record high of 13%, and Spain’s remained more than twice the eurozone average.

Eurostat reports:

Among the Member States, the lowest unemployment rates were recorded in Austria (4.8%), Germany (5.1%) and Luxembourg (6.1%), and the highest in Greece (27.5% in December 2013) and Spain (25.6%).

While any drop in unemployment is welcome, these rates remain depressingly high.

And Europe still faces a youth unemployment crisis, although the number of young people out of work has fallen over the last year.

There were 5.392 million under 25′s unemployed in the EU28, of whom 3.415 million were in the euro area.

Eurostat adds:

Compared with February 2013, youth unemployment decreased by 295 000 in the EU28 and by 194 000 in the euro area. In February 2014, the youth unemployment rate was 22.9% in the EU28 and 23.5% in the euro area, compared with 23.6% and 24.0% respectively in February 2013.

And again, you stand far more chance of getting on the career ladder in the northern core of Europe:

In February 2014, the lowest rates were observed in Germany (7.7%), Austria (9.4%) and the Netherlands (11.5%), and the highest in Greece (58.3% in December 2013), Spain (53.6%) and Croatia (48.8% in the fourth quarter of 2013).


We also have dispiriting news on Britain’s productivity – a big cause for concern in political and economic circles.

My colleague Katie Allen explains:

The latest official statistics on UK productivity show little turnaround from the languid growth of recent quarters.

The Office for National Statistics says that on an output per hour basis, UK labour productivity increased by 0.3% in the fourth quarter of 2013 and it was 0.7% higher than a year ago. Output per worker was unchanged in Q4.

Manufacturing and the rest of the industrial sector enjoyed stronger growth than the UK’s dominant services sector.

Output per hour in service industries grew by 0.3% in the fourth quarter, and has grown or been unchanged in each quarter of 2013. Across the production industries, output per hour grew by 1.2% in the fourth quarter, reversing a fall of a similar magnitude in the previous quarter.

More here.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, says today’s PMI survey shows Britain’s “strong” domestic demand is making up for weakness overseas:

“In spite of softer rates of expansion, UK manufacturing held its ground in March benefitting from ongoing improved operating conditions.

Leading the way to growth was the strong domestic market which, alongside robust consumer and intermediate production, was able to offset this month’s slower growth in both overseas demand and the investment goods output.

And according to Markit, some UK firms reported a drop in new orders from clients in the Asia-Pacific region — perhaps another signal that China’s economy is slowing?

Britain’s factory sector also suffered a slowdown in growth last month, driven by a worrying weakness in exports.

However, the sector did continue to expand – but at its slowest rate in eight months.

The UK manufacturing PMI dropped back to 55.3 in March, from February’s 56.2. That is weaker than City analysts had expected, but still some way above its longterm average.

The drop was due to a slower rise in output and new business. New export orders weakened further, to the slowest pace of growth for ten months.

It’s a sign that Britain is still struggling to rebalance its economy – a few days after the UK current account deficit widened alarmingly.

Markit’s Rob Dobson said:

The old criticisms still apply, with the survey signalling a downturn in export growth and an expansion that is all-too reliant on domestic consumers. However, the very fact that we have a healthy manufacturing economy that is generating jobs at a rate rarely seen in recent decades suggests that the rebalancing process is underway.

We may be still a consumption-oriented economy in many respects, but at least we now appear to be producing more of the goods we sell ourselves, which is a more sustainable situation to be in.


Deflation fears grow as eurozone factory growth slows

The upshot of this morning’s data (see 8.22am onwards) is that the Eurozone factory sector continued to expand last month, but at a lower rate than February.

And there are new fears over deflation, as the prices of raw materials and finished goods dropped.

The overall Eurozone manufacturing PMI, which surveys thousands of firms across the region, dropped to 53.0 in March from 53.2 in February. That shows growth, but at a slightly slower rate.

France’s surprise return to growth was balanced out by Germany’s weaker performance.

As Markit put it:

Slowdowns in February’s top performers – Germany, the Netherlands and Austria – were largely offset by faster growth in Ireland (35-month high), Spain (47-month high) and Italy (2-month high) and a return to expansion in France that took its PMI to a 33-month peak. 

The Greek PMI edged back into contraction territory for the first time in three months.

The survey showed that Eurozone manufacturing output, new orders and new exports all rose.

However, in another warning signal to the European Central Bank, average input costs declined for the second month running and output prices also dipped.

Chris Williamson, chief economist at Markit, says the data underlines that the eurozone recovery isn’t secure:

Alongside the renewed fall in factory gate prices, signs of slower output and order book growth are a reminder that a self-sustaining recovery is not yet in place and reliant at least in part on price discounting to win sales.

Such deflationary signals will continue to spook policymakers and raise the likelihood of further stimulus from the ECB.


Greece’s factory sector activity has slipped back into contraction as firms keep cutting jobs, and the recent growth in new orders slows.

The Greek manufacturing PMI has dropped below the 50-point mark, coming in at 49.7 in March, from 51.3 in February. That’s the lowest reading this year.

Markit’s Phil Smith said it was “somewhat disappointing” to see the headline PMI fall back below 50.0, in March:

However, the key indices pertaining to output and new orders remained in growth territory – albeit they were lower than February’s peaks – suggesting the manufacturing sector has made a positive contribution to GDP in the opening quarter.


Growth in Germany’s factories has fallen back, though — with its monthly manufacturing PMI dropping to 53.7 from 54.8 in February.

Although that it still healthily in ‘expansion’ territory (above 50), it suggests the eurozone’s largest economy may have lost some zip last month.

Oliver Kolodseike, economist at Markit, warned:

Germany’s goods producing sector lost some of its recently strong growth momentum…

Output and new business orders rose at sharp, albeit weaker rates, adding evidence that the manufacturing upturn has moderated slightly. With employment growth edging closer to stagnation and export growth easing to a five-month low, the data signal that there might still be a few obstacles on the path to recovery.

Wowzers – France’s factory sector has posted its biggest jump in output in 33 months, returning to growth for the first time in two years.

French manufacturing “sprang back to life” last month, Markit said, perhaps calming concerns that France has become the sick man of Europe.

The French manufacturing PMI jumped to 52.1, up from 49.7 in February, the highest reading since June 2011. That also ended a two-year period of continuous sub-50 readings (which showed a contraction).

Employment at French manufacturers increased fractionally in March, after two years of steady job shedding.

Jack Kennedy, Senior Economist at Markit, which compiles the France Manufacturing PMI® survey, said:

“The French manufacturing sector delivered a much improved performance in March, buoyed by solid growth of new orders.

With the sector having finally moved into expansion territory following a prolonged spell of weakness, firms will be looking for signs of a convincing recovery taking hold before looking to boost areas such as employment. If input prices continue to fall, French manufacturers may look to gain a competitive edge through cutting output prices.”

Here comes the survey of Italy’s factory sector….and it has followed Spain (see 8.35am) with another rise in activity – but no improvement on the jobs front.

Italy’s factory PMI rose to 52.4 in March, up from 52.3 a month ago, driven by a rise in exports.

Markit, which compiled the survey, said it showed another solid increase in Italy’s manufacturing output — with new orders also up.

However, there was “negligible” improvement in employment levels across the sector.

Markit explains:

Another area that manufacturers targeted for streamlining was employment. While production levels rose at a solid and accelerated pace, job creation eased to the slowest in the current five- month sequence and was negligible.

Only the investment goods sector saw a substantial rise in staffing numbers since February.

Markit is also worried that the cost of raw materials, and finished products, both fell – suggesting Italy’s economy risks sinking into deflation….

“Also of note in March’s data was the simultaneous falls in input and output prices, which further highlight the risk of deflation in Italy.”

Spanish factory growth hits four-year high

Spain’s factory sector continues to claw its way back from recession, with manufacturers reporting the fastest growth since April 2010.

The Spanish PMI, based on interviews with purchasing managers across the country, jumped to 52.8 in March — the fourth month in a row that it has come in above the 50-pint mark, denoting growth.

Firms reported a rise in new orders, and stronger demand from clients.

Markit said:

Rates of expansion in both output and new orders quickened during the month, although employment growth dropped off.

But the improvement hasn’t yet reached Spain’s troubled labour market — staffing levels were “broadly unchanged” last month.

And the survey also shows that eurozone inflation is sagging — factories reported that input costs fell while output charges decreased at a moderated pace in March.

Andrew Harker, senior economist at Markit and author of the report, said:

“The recent pick-up in the Spanish manufacturing sector continued in March, finishing off a solid first quarter.

Sharper rises in both new and existing orders suggest that further growth of output is likely in the near-term. Input prices decreased for the second time in the past three months, highlighting a continued lack of inflationary pressure.”


The first European manufacturing surveys are in. They all show growth — although it did slow in several countries.

The Netherland’s PMI dropped to 53.7 in March from 55.2. That indicates that its factories continued to expand last month, at a slower rate.

Poland’s PMI fell to 54.0, from 55.9 – also showing slower growth.

Hungary slipped to 53.7, from, 54.3.

But Norway posted faster growth, rising to 51.9 from 51.1 in February.

Asia’s stock markets have shaken off worries over China, hitting a four-month high on the back of some very dovish comments by the Federal Reserve chair, Janet Yellen, on Monday.

The MSCI index of Asia-Pacific shares has risen 0.4%, to its highest level since December. The main Chinese indices are up around 0.6%.

This follows Yellen’s speech yesterday, in which she argued that the US economy and its jobs sector remained weak and would require plenty more help from the Fed . In effect, she’s nimbly countered hew own suggestion, two weeks ago, that the Fed could raise interest rates in early 2015. One strategist called it “one of the most dovish speeches I have ever read”.

HSBC: Chinese manufacturing PMI hits eight-month low

Medium-sized and small firms in China are continuing to struggle to grow, adding to concerns that the Chinese economy is losing steam.

HSBC’s China manufacturing PMI survey, which focuses on smaller private companies, showed that activity contracted for the third month in a row in March, at the fastest rate in eight months.

It fell to just 48.0 in March, down from 48.5 in February, showing “a moderate deterioration of the health of the sector”. Any reading under 50 shows a contraction, and this is the biggest fall since July 2013.

Firms reported that output and new orders both fell, at a faster rate, while workforce numbers also fell. The survey suggests that China’s domestic economy is still cooling, as new business from abroad rose for the first time in four months.

Hongbin Qu, chief economist at HSBC, argued that China’s government needs to take further stimulus measures soon:

“The final reading of the HSBC China Manufacturing PMI in March confirmed the weakness of domestic demand conditions. This implies that 1Q GDP growth is likely to have fallen below the annual growth target of 7.5%. We expect Beijing to fine-tune policy sooner rather than later to stabilise growth.”

Here’s the details:

Key points

  • Both output and new orders contract at faster rates…
  • …while new export orders return to growth
  • Input costs and output charges both fall sharply

Confusingly, the ‘official’ Chinese PMI survey was a little more positive – inching higher to 50.3 in March from 50.2 in February. That may show that the biggest Chinese firms, and those under state control, are performing better.

But economists had hoped to see a stronger reading, as the disruption caused by the Chinese new year fades away.

IG’s Evan Lucas explained:

The March read was the first read free of the Chinese Luna New Year and despite the constant expansion there are weaknesses across the domestic sector, seeing price and output contracting.


Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.

It’s a busy morning for economic data, with manufacturing surveys from countries across the globe being released in the next few hours.

Fresh data from Europe will show how its economy is faring, after yesterday’s weak inflation data prompted fears that it is sliding into deflation.

Two surveys from China overnight have shown that its factory sector remained subdued in March (more to follow).

In the eurozone, European finance ministers are gathering in Athens for a meeting that could give the green light to Greece’s next tranche of bailout loans.

And in the UK, we’ll be watching the fallout from the official report into the privatisation of Royal Mail. Overnight, the National Audit Office hammered the handling of the sale; an extra £750m could have been raised for taxpayers if the government had heeded warnings that the company was being sold too cheaply.

Royal Mail: undervaluing shares costs taxpayer £750m in one day

I’ll be tracking the main events through the day…. © Guardian News & Media Limited 2010

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