retail sales

BoE has slashed its forecast for wage growth this year, warned that geopolitical risks are rising, and said contingency plans for financial upheaval over Scottish independence are ready. Here are key points from the Bank’s Quarterly Inflation Report…

 


Powered by Guardian.co.ukThis article titled “Business Liveblog: Bank of England cuts wage growth forecast, and reveals Scottish contingency plans” was written by Graeme Wearden, for theguardian.com on Wednesday 13th August 2014 12.51 UTC

US retail sales miss forecasts, with no growth in July

Over in America, a disappointing set of retail sales figures have just raises concerns over the strength of its recovery.

Retail sales were flat in July, the worst performance in six months, having only risen by 0.2% in June.

Car sales fell, and demand for electronics and home appliances was weak — not a great sign of consumer confidence.

Core retail sales, which strips out cars, gasoline, food services and building materials, rose by just 0.1% in July, and June’s figure was revised down from 0.6% to 0.5%.

Ahha! On page 29 of the BoE’s Inflation report is a bar chart, showing how most new jobs created in the last six months have been in ‘low skill’ professions.

This may help explain the low growth in average earnings in recent months, if more new hirers are taking lower paid positions.

Hat-tip to Jeremy Warner of the Telegraph for flagging it up:

Labour: Weak wage growth shows economy isn’t fixed

Chris Leslie MP, Labour’s Shadow Chief Secretary to the Treasury, has seized on the news that the Bank of England has slashed its forecast for wage growth this year, to just 1.25%.

He says:

“The inflation report shows why this is no time for complacent and out-of-touch claims from Ministers that the economy is fixed and people are better off.

“While the economy is finally growing again and unemployment is falling, working people are still seeing their living standards squeezed. Pay growth is at a record low and lagging behind inflation and the Bank of England has halved its forecasts for wage growth this year.”

As covered earlier this morning, the latest unemployment data showed earnings growth faltering,

Total wages (including bonuses) have shrunk for the first time since 2009. And stripping out bonuses, average earnings rose by the lowest since records began in 2001, up just 0.6%.

Michael Izza, chief executive of ICAEW (which represents accountants) says the Bank of England’s new, lower wage growth forecasts are a concern:

The numbers of self-employed and part-time workers, together with those on zero-hours contracts are contributing to a flexible labour market that is keeping wages down. In addition, auto-enrolment means that employers are having to fund pensions from somewhere, and wages are suffering as a result.

David Kern, chief economist at the British Chambers of Commerce, says the Bank of England is giving out “mixed messages” on the outlook for interest rates.

The higher growth forecast for 2014 and the lower estimate for the amount of slack in the economy may be seen as a signal to bring forward interest rate rises.

However, Governor Carney’s comments will reassure businesses that the MPC will not rush any increases in rates. He also acknowledged that the rising supply of labour in the economy may provide new sources of economic capacity.

An early UK interest rate rise looks a little less likely, reckons Neil Lovatt, director of financial products at Scottish Friendly.

He says:

“To read between the lines, the message today is that rates are still destined to rise, but when that will be is still up for debate. The fickle nature of the UK economy seems to keep everyone guessing.”

“Any rate rises will be small, but even very small rises in interest rates will have a significant effect on what is still a fragile economy. That said, savers thinking that the ‘good old days’ of high interest rates will return are going to be sorely disappointed and the sooner we adapt to this environment the better.”

Those new BoE forecasts

Berenberg Bank have kindly wrapped up the changes to the Bank of England’s forecasts:

  • Growth up. The BoE raised its growth forecasts to 3.5% in 2014 and 3.0% in 2015, both up by 0.1ppts from their previous forecast. Although they cut their 2016 forecast to 2.6% from 2.8%
  • Inflation up in 2014 but down in 2015 and 2016. The BoE now forecasts 1.9%, 1.7% and 1.8% inflation for 2014, 2015 and 2016, compared to 1.8%, 1.8% and 1.9% in their previous forecast.
  • Unemployment down. To 5.9%, 5.6% and 5.4% in 2014, 2015 and 2016, from 6.3%, 6.0% and 5.9% in the previous forecasts.
  • Pay growth cut in the near term but raised later in the forecast. Specifically, the BoE now forecasts wage growth of 1.25%, 3.25% and 4% in 2014, 2015 and 2016 from 2.5%, 3.5% and 3.75%.
  • Slack now estimated at 1% of GDP, compared to 1-1.5% in the second quarter.

So, good news on growth and unemployment, but bad news on pay.

As Berenberg’s UK economist, Rob Wood, puts it, there’s “something for everyone”.

This fan chart shows the new growth forecasts:

One more key point — the Bank of England flagged up that geopolitical dangers (think Ukraine or the Middle East) are a growing threat to Britain’s recovery.

Carney said:

“Markets have been remarkably resilient to some of these geopolitical events and we’re only beginning to see the first advance signs of the middle through some of our major export markets such as Germany and the movements of some of the confidence indicators.”

(thanks to Reuters for the quote)

Bank of England’s quarterly inflation report – the key points

Quick recap.

1) The Bank of England has slashed its forecasts for wage growth, conceding that the recovery has still not fed through to people’s pockets.

The BoE now expects earnings to rise by just 1.25% this year, down from 2.5% previously. It admitted that there appears to be more slack in the economy than it realised, although it is also being eaten up at a faster rate.

Governor Mark Carney said the UK was experiencing “strong output growth”, but this has not been matched by a material pickup in productivity, or wages.

2) The prospects of an early rise in UK interest rates appear to have faded.

The pound tumbled on the news, shedding one cent against the US dollar to $1.6714 as investors calculated that an early rate rise is less likely than before.

The Bank also hammered home that interest rate rises will be gradual and limited, when the time comes to end Britain’s long period of record-low borrowing costs.

3) “Contingency plans” have been drawn up in case Scotland votes for independence.

Carney said:

”Uncertainty about the currency arrangements could raise financial stability issues….We have contingency plans.”

4) During an occasionally barbed press conference, Carney denied that the Bank was increasingly clueless about the UK economy.

He argued that rising geopolitical risks mean there is naturally more uncertainty about the situation, and denied that his precious forward guidance policy has been a muddle.

5) Europe remains a big worry. The BoE says that:

Eurozone growth continued to disappoint, net lending has been falling and inflation has stayed low.

And deputy governor Minouche Shafik warned that the UK can’t rely on the eurozone to drive its recovery.

Eurozone industrial production hits recovery hopes

Incidentally, we had further confirmation this morning that the eurozone is struggling — a poor set of industrial production numbers.

My colleague Jo Moulds reports:

Factory output in the eurozone contracted unexpectedly in June, further damaging hopes of a strong recovery.

Industrial production dropped 0.3% on the month following a 1.1% drop in May, hit by the ongoing conflicts in the Ukraine, Iraq and Gaza.

Production was flat compared to the same time last year. Economists had been targetting a 0.1% rise on the year. The annual reading was the lowest since August 2013.

Bank of England: we can’t rely on the Eurozone for our recovery

Britain can’t rely on the eurozone economy to drive our recovery, warns the Bank of England’s new deputy governor, Minouche Shafik.

Asked about the impact of the European Central Bank’s new stimulus measures (including hundreds of billions of cheap loans for banks), Shafik urged caution, saying the new impact of this LTRO programme will become clear over time.

The eurozone still faces low growth and low inflation, Shafik says, and we need to see whether the ECB’s measures lead to stronger credit growth and a stronger recovery.

The UK can’t rely on a eurozone recovery to lift our recovery. It would be good if the eurozone could drive us forwards, as it’s such an important export market, that’s not very likely, she concludes.

And that was the end of the press conference. Summary and reaction to follow…

Updated

Asked about the rise in self-employed workers (as covered earlier in the blog) deputy governor Ben Broadbent plays down the suggestion that it’s a risk. This isn’t necessarily a bad thing for productivity, he claims.

The Bank of England is tweeting some of the key points from today’s briefing, including a rather dashing (and slightly menacing?) photo of the governor:

Carney treats a question about his ‘muddled’ forward guidance policy with some distain.

Asa Bennett of the Huffington Post points out that the initial pledge (no rate rise until unemployment has fallen below 7%), has evolved into a broader measure based on slack, wage growth, and the like. Was it a muddle, or a learning process?

Not an unfair question, frankly, if a little mischievous.

But Carney doesn’t look pleased, claiming that Bennett is the muddled one, and that his guidance has been entirely consistent across many inflation reports and MPC minutes.

It’s consistent, it’s boring, but what’s what you get, he smiles.

The audience aren’t smiling, though:

Mark Carney: Bank of England has contingency plans for Scottish independence

Mark Carney has revealed that the Bank of England has drawn up contingency plans in case Scotland votes for independence next month.

Asked for his views on the prospect of ‘sterlingisation’ (that Scotland would use the pound without a formal currency union), Carney reveals that that BoE is preparing for all eventualities, as “uncertainty” over Scotland’s currency arrangements could hit financial stability.

He concedes that

He says:

We have contingency plans…. but it’s never a good idea to talk about them in public apart from to say that you have them.

Carney says that in terms of the Bank’s responsibilities for financial stability, we have “a wide range of tools and plans”. And the BoE isn’t the only body with responsibilities here — some are shared with the Treasury.

Updated

Back on the markets…. Carney says he is “encouraged” that the financial markets are more responsive to the latest data.

James Macintosh of the Financial Times takes up Larry’s point, that the Bank is looking increasingly clueless (on a spectrum between certainty and cluelessness).

Mark Carney replies; if we can agree that the range is between perfect certainty and perfect uncertainty, it’s fair that there is more uncertainty, mainly around the issue of productivity.

Here’s a link to the inflation report (sorry for the delay #hectic)

Ah, the Scotland question — is it time for Alex Salmond to produce a Plan B on an independent Scotland’s currency?

Mark Carney takes a cautious line; the Bank will implement whatever policymakers decide, but it has “noted” the statements from the three main UK political parties that they would not enter a formal currency union with iScotland.

He also points out that the Bank has a responsibility for financial stability across the UK, and will keep discharging those duties until circumstances change.

Updated

Could the Bank of England raise interest rates by as little as 0.125%, or would that be the equivalent of ‘boiling the frog’, asks Szu Ping Chan of the Telegraph.

Carney chuckles at the analogy, but doesn’t suggest such a small rise is on the agenda.

Ed Conway of Sky invites Mark Carney to comment on the financial markets’ expectations for UK interest rate rises (harking back to his Mansion House speech in June, when he suggested they were too dovish).

Carney plays the ball deftly, saying that the overall shape of market expectations are consistent with an adjustment that is both gradual and limited.

Deputy governor Ben Broadbent chips in, saying that it’s a “false dichotomy” to suggest the Bank should either be completely certain about everything, or completely clueless.

Larry Elliott, the Guardian’s economics editor, isn’t impressed by today’s report:

Doesn’t today report show that the Bank “really hasn’t got a clue, the MPC is divided, and that anyone taking out a mortgage or an overdraft would be ill-advised, as anything you say must be taken with a very large pinch of salt?”, Larry politely suggests.

Governor Carney defends his record, suggesting rather archly that Larry should try speaking to a lot of firms around the country*. The firms I speak to insist that business have understood the Bank’s ‘forward guidance’, he adds.

Interest rates will go up as the economy improves, they will go up to a limited extent, ands gradually, Carney says. But there are geopolitical dangers, and we may need to react to them.

* – Like in Rochdale, perhaps, Governor?

How much spare capacity is left to be absorbed in the UK economy?

Carney says there is “tremendous uncertainty” about the degree of slack, among policymakers on the Bank’s monetary policy committee (the overall view is that there’s 1% of capacity to mop up).

That’s not hugely reassuring, given the importance that the Bank now puts on the issue when setting monetary policy.

Updated

Alex Brummer of the Daily Mail wants more details about the Bank’s worries about geopolitics.

Carney replies that there is a “slight downturn skew” to today’s growth forecasts.

Bank of England press conference – Q&A session begins

Onto questions — Ben Chu of the Independent asks why the Bank has lowered its forecasts for productivity growth.

Mark Carney explains that firms have been taking on workers rather than investing in new equipment, as labour is cheaper than capital.

That process should end once cheap labour has been mopped up, meaning workers demand higher wages, and encouraging firms to invest in new equipment that will boost productivity. That process is taking longer than thought.

Pound hits 10-week low against the US dollar

The pound has hit its lowest level against the US dollar since last May, as the markets digest the inflation report (and the jobless data).

Sterling is down by 0.45% today, at $1.6732.

Updated

On interest rates, Mark Carney again reiterated that borrowing costs will rise in a “small, slow” manner, when the appropriate moment comes.

The economy is returning to a semblance of normality, Carney concludes.

Carney says that the amount of spare capacity in the economy has fallen somewhat in the last quarter, but the Bank also reckons there was more slack in the UK than before.

Updated

Bank of England slashes forecast for wage growth.

Over at the Bank of England, governor Mark Carney is unveiling the Quarterly Inflation Report.

He is declaring that the Uk recovery is “on track”…. “Robust growth” has taken output above the pre-crisis peak, and the Bank has revised its near-term forecast for growth up.

But the Bank has also slashed its forecast for wage growth in the UK.

  • It now expects wages to rise by just 1.25% in 2014, down from 2.5% previously.
  • It sees growth picking up to 3.25% in 2015, down from 3.5% before.
  • And in 2016, it reckons wages will rise by 4%, up from 3.75% previously.

Carney is also warning that Britain faces rising geopolitical risks, while the eurozone economy remains weak.

And the persistent strength of sterling is also a worry.

You can watch the press conference live here (right-click to open in a new tab).

Updated

So much for the year of the pay rise

Today’s report have cast a shadow over hopes that 2014 will be “the year of the pay rise.”, says the Resolution Foundation.

Adam Corlett, their economic analyst, comments:

“Once again a strong employment performance is to be welcomed but concerns remain over wages. There is still good reason to expect that real pay will start increasing during 2014 but today’s disappointing performance pushes the wages recovery further down the road.

It’s now almost impossible for average real pay in 2014 as a whole to exceed last year’s unless we see an unprecedented surge in wages during the rest of the year.

The number of people receiving the Jobseekers Allowance could soon fall below the one million mark:

The Press Assocation reports:

The claimant count fell for the 21st month in a row in June, by 33,600 to 1.01 million, according to today’s data from the Office for National Statistics.

If the trend continues, the number of Jobseeker’s Allowance claimants will fall below a million next month for the first time since September 2008.

See the report yourself

Nearly forgot… you can see the full labour market report here (as a pdf).

Iain Duncan Smith: Long-term plan is working

Work and Pensions Secretary Iain Duncan Smith has claimed that his changes to the welfare system have helped heal the labour market.

Here’s his official response to the jobless figures:

“In the past, many people in our society were written off and trapped in unemployment and welfare dependency. But through our welfare reforms, we are helping people to break that cycle and get back into work.

“The Government’s long-term economic plan to build a stronger economy and a fairer society is working – with employment going up, record drops in youth unemployment and hundreds of thousands of people replacing their signing-on book with a wage packet.

“This is transformative, not only for these individuals and their families, but for society as a whole. That is why we have set full employment as one of our key targets – bringing security and hope to families who have lost their jobs and others who never had jobs, we put people at the heart of the plan.

“The best way to help even more people into work is to go on delivering a plan that’s creating growth and jobs.”

However….critics, such as our own Polly Toynbee, are less impressed with Duncan Smith’s performance, given the stuttering start to his universal credit project:

Iain Duncan Smith’s delusional world of welfare reform

Today’s slump in real wages are a blow to hopes that the cost of living squeeze was easing — readers may remember that four months ago there was chatter that the squeeze was over, after pay rises (briefly) burst above inflation.

Could Britain’s falling real wages be partly due to changes in the composition of the labour market, with more people taking lower-paid jobs?

Newsnight’s economics correspondent, Duncan Weldon, reckons so:

Britain’s youth unemployment total has fallen:

The ONS reports that there were 767,000 unemployed people aged from 16 to 24 in April-June 2014; 102,000 fewer than for January to March 2014 and 206,000 fewer than for a year earlier.

These were the largest quarterly and annual falls in youth unemployment since comparable records began in 1992.

Updated

The recovery in the labour market has partly been driven by Britain’s army of self-employed people, which swelled by almost 10% over the last year.

The ONS reports that, since April-June 2013,

  • The number of employees increased by 447,000 to reach 25.77 million.
  • The number of self-employed people increased by 408,000 to reach 4.59 million.

UK unemployment, the key charts:

These two charts show what a bizarre jobs recovery the UK is experencing.

On the one hand, the employment rate is close to its highest level on record, as jobless falls and more people find work (820,000 in the last year).

But yet, real wages are shrinking – with the gap between earnings and inflation widening alarmingly (whether you include volatile bonuses or not)

One reason for caution — pay packets were boosted a year ago, because many bonuses were held back until after the UK top tax rate fell to 45%, in April 2013.

The ONS points out that “some employers who usually paid bonuses in March paid them in April last year.”

But if you strip out bonuses, pay is still up a measly 0.6% year-on-year, the lowest on record.

Updated

This chart from Bloomberg confirms that UK wages have suffered their first fall since the depths of the financial crisis:

Here are the key points on today’s unemployment data, from the ONS:

  • For April to June 2014, there were 30.60 million people in work, 167,000 more than for January to March 2014 and 820,000 more than a year earlier.
  • For April to June 2014, there were 2.08 million unemployed people, 132,000 fewer than for January to March 2014 and 437,000 fewer than a year earlier.
  • For April to June 2014, there were 8.86 million economically inactive people (those out of work but not seeking or available to work) aged from 16 to 64. This was 15,000 more than for January to March 2014 but 130,000 fewer than a year earlier.
  • For April to June 2014, pay including bonuses for employees in Great Britain was 0.2% lower than a year earlier, but pay excluding bonuses was 0.6% higher.

UK unemployment rate drops to 6.4%, but wages fall

Breaking News: Wage growth in the UK has hit its lowest level on record, and actually contracted if bonuses are included.

The Office for National Statistics reports that average earnings, excluding bonuses, rose by a mere 0.6% in the three months to June.

That means pay packets lagged well behind inflation — which hit 1.9% in June.

Including bonuses, total pay packets actually contracted by 0.2% during the quarter, the first fall since 2009.

In brighter news, the overall unemployment rate fell to 6.4% in April-June, which is the lowest since the end of 2008. And the claimant count fell by 33,000, showing that the labour market continues to recover.

But that recovery still isn’t reaching people’s pockets.

More details and reaction to follow

Updated

Nearly time for the UK unemployment data to hit the wires….

Reminder — economists expect another rise in employment, and a drop in the number of people claiming benefits.

But a crucial issue is whether earnings are picking up, after years of low pay rises.

As my colleague Katie Allen reports, many employees have been hit hard:

Angela Chicken was still in hospital with her newborn son when she was made redundant. She had been earning £11 an hour as a graphic designer. Ten years on, the 52-year-old single mother makes around £8 an hour working part-time at her local Sure Start children’s centre in Southampton.

With the cost of living rising faster than her pay, Chicken’s wages have fallen even further in real terms, a pattern likely to be reflected across the country in the latest official labour market figures today. After bills and housing costs, Chicken is left with £108 a week to feed herself and her son, buy clothes and anything else they need. They eat well, she said, but there is little left for treats or outings.

“We don’t really have enough money to go on holiday … I don’t get haircuts, I very rarely buy any clothes,” she said. “What I have had to do is pull myself back over the last 10 years to a position that isn’t as good as it was because I got knocked off my perch.”

More here:

In low-wage economy employers paying well make sound investment

Updated

Most of Europe’s stock markets have risen this morning, despite the worrying economic news from Asia overnight (details).

Germany’s DAX is leading the way, up 77 points or 0.86% at 9147.

Insurance group Swiss Re has cheered investors by posting a 3.5% jump in profits.

In London the FTSE 100 is flat (dragged back by a few companies going ‘ex-dividend’).

The Bank of England may admit this morning that it was too optimistic about wage growth, reckons Bloomberg’s Emma Charlton:

We also have confirmation that the eurozone has slipped worryingly close to deflation last month.

Fresh data this morning showed that Spain’s consumer prices index fell by 0.3% year-on-year in July, the biggest drop in almost five years. Month-on-month they slipped by 0.9%.

In France, prices were up by a meagre 0.5% last month compared with July 2013, and also fell on a monthly basis, down 0.3%.

Japan’s GDP shrinks by 6.8%; Chinese new lending slumps

Global economy watchers have two big pieces of economic data from Asia to digest today.

1) Japan has suffered its biggest contraction since the 2011 tsunami, in a blow to efforts to revitalise its economy.

Japanese GDP fell at an annualised rate of 6.8% between April and June (meaning it shrank by 1.7% during the quarter). The slump is being blamed on the recent hike in Japan’s sales tax, from 5% to 8%, which encouraged firms and households to bring forward their spending to January-March.

The government remains relaxed, saying the economy is recovering. But critics of prime minister Abe’s stimulus plan suggest he may have to postpone plans to raise the sales tax again in December.

2) The news from China isn’t too rosy either. The broadest measure of new credit has dropped to the lowest since the global financial crisis, suggesting many banks are cutting back on new lending.

Economists are concerned, as Chinese banks also face the impact of the property market downturn. Beijing may need to unleash further stimulus measures to avoid growth weakening. fastFT has a round-up of analyst comments.

Updated

Analysts at ING will be combing the inflation report for signs that the Bank of England’s monetary policy committee was divided last week, when it voted to leave interest rates unchanged.

They say:

The Bank will release new forecasts and update its forward guidance which will leave the door open for a rates rise this year. Any hints of dissent at the August meeting will boost the case for a November hike.

Inflation report: what to watch for

The Bank of England inflation report will be scrutinised for hints over interest rate rises, the latest assessment of ‘slack’ in the economy, wage growth (or lack thereof), and the outlook for growth (could possibly be revised up) and inflation (might be revised down).

Mark Carney can also expect a few questions about the UK housing market.

Here’s Angela Monaghan’s preview:

Bank of England inflation report – what to watch for

City analyst Michael Hewson of CMC Markets predicts that today’s data will show another welcome drop in the jobless rate, but an unwelcome drop in wage growth.

He writes:

The latest ILO unemployment numbers for June are expected to see a drop from 6.5% to 6.4%, while jobless claims in July are expected to show another drop of 30k, slightly lower than the 36.3k drop seen in June.

Wages growth continues to be the economic head scratcher and is the Bank of England’s biggest problem when it comes to deciding when to raise rates. If we continue to see the gap with inflation widen out then it becomes increasingly difficult to see how the Bank could even contemplate a rate rise this year.

Expectations are for flat wage growth for the 3 months to June, down from the 0.3% rise in May.

* – The wages figures are skewed by the cut in Britain’s top rate of income tax back in April 2013. That prompted some firms to hold back bonus payments until then, making comparisons trickier.

UK unemployment and Bank of England inflation report in focus

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

We’re tracking two big events in the UK this morning. First, the latest unemployment figures, due at 9.30am BST. They are expected to show another drop in the number of people out of work.

But that labour market recovery has come at a price — low wage growth, and today’s figures are likely to show pay rises lagging behind inflation again.

That would mean real wages are still falling; taking the shine off Britain’s economy recovery.

That data will set the scene for the Bank of England’s latest quarterly Inflation Report, released at 10.30am.

This is the Bank’s latest health-check on the UK economy, including forecasts for growth and inflation.

But the big issue is whether the BoE has moved closer to hiking interest rates — Governor Mark Carney will probably be quizzed on this during the press conference.

The key issue is whether the Bank thinks most of the spare capacity, or ‘slack’, in the economy has now been mopped up. Carney will probably reiterate that the Bank is watching wage growth closely – showing whether employers are having to pay more for talent, and whether households could cope with higher borrowing costs.

As Ian Williams of Peel Hunt explains:

Formal changes to the forecasts are likely to be minimal; the overall assessment of the degree of slack, especially regarding the labour market, will be the focus of investor interest.

Elsewhere, European stock markets are expected to rise modestly, despite ongoing geopolitical tensions [the Russian aid convoy chugging towards the Ukraine border could be the next flashpoint].

And in the euro area, investors are digesting yesterday’s slump in German investor confidence, and fretting about how bad tomorrow’s growth figures for the April-June quarter could be.

I’ll be tracking the key events though the day….

Updated

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USA 

Finance ministers meet in Dublin to discuss crisis in Cyprus and Slovenia situation, with extensions to bailouts for Ireland and Portugal reportedly on the agenda. US retail sales register their largest drop in nine months, consumer sentiment falls…

 


Powered by Guardian.co.ukThis article titled “Eurozone crisis live: Cyprus tops agenda as finance ministers meet” was written by Dan Milmo and Simon Neville, for theguardian.com on Friday 12th April 2013 16.42 UTC

5.42pm BST

Cameron and Merkel settle in for a night of talks

David Cameron has arrived in Berlin and is meeting with his German counterpart, Angela Merkel.

Shortly after arriving, Merkel showed Cameron around the grounds of her country mansion posing for pictures and doing lots of statesman-like pointing into the distance.

They then headed inside for a fireside chat to sort out all of Europe's problems.

And with two of Europe's most powerful leaders settling in for the night, it marks a good point to end today's live coverage of the eurozone crisis.

Thank you for all your comments and enjoy the weekend, we'll be back on Monday.

German Chancellor Angela Merkel and her husband Joachim Sauer welcome David and Samantha Cameron.
German Chancellor Angela Merkel and her husband Joachim Sauer welcome David and Samantha Cameron. Photograph: FABRIZIO BENSCH/REUTERS

5.32pm BST

Family portrait

European finance ministers poses during their meeting in Dublin.
European finance ministers poses during their meeting in Dublin. Photograph: CATHAL MCNAUGHTON/REUTERS

As promised, here's the family portrait of the EU ministers at their meeting in Dublin.

5.11pm BST

Merkel and Cameron meet

David Cameron has arrived at Angela Merkel's country retreat and both are posing for photos with their spouses.

Meanwhile, to get you in the mood, the Open Europe blog has written a list of 10 things Cameron shouldn't say to Merkel.

These include:

"I always thought the ECB should become more activist."

and

"Can you point me to that no-bailout clause in the EU treaties again?"

Elsewhere, the often amusing Angela Merkel twitter feed has tweeted about David Cameron bringing his family to stay in Germany overnight. (see 12.33pm)

Updated at 5.17pm BST

5.02pm BST

New Portugal spending cuts agreed

Over in Lisbon, the Portuguese government has presented new spending cut plans to the EU after a court rejected its initial €1.3bn austerity measures for this year.

The cuts are required as part of the agreement for its €78bn bailout.

The government will implement new spending cuts worth €600m at all ministries and bring forward the same amount of reductions envisaged for 2014.

In return, eurozone finance ministers will extend Portugal's loan maturity date by seven years.

4.26pm BST

The eurozone finance ministers have finally made it out for their group photo. Will upload a picture shortly. The photographer just shouted "and one more but look happier!"

4.19pm BST

Just to add some context, the last time gold fell below ,500 an ounce was in July 2011

4.14pm BST

Updated at 4.14pm BST

4.10pm BST

Gold below ,500

Gold prices are plunging today despite poor US retail figures today and declining consumer confidence, which usually leads to a boost for gold as a save haven.

It is now down 3% today to ,497 an ounce. Silver is also suffering.

It won't be much help for Cyprus, who are considering selling its gold reserves to raise funds for its bailout agreement.

3.46pm BST

Busy FinMins

The eurozone finance minster meetings is Dublin continue, and they must've got really stuck into their discussions because they are now running late for their family photo which was due 15 minutes ago. Latest estimates are that they will be ready in 10 minutes, unless negotiations over where in the lineup each minister stands have reached an impasse.

One topic that hasn't been covered in discussions today has been the concern over Slovenia (see below).

3.29pm BST

Slovenia banking boss supports €1bn estimate for recapitalisation

Staying in Slovenia, the head of the country's largest bank said the government's estimate that around €1bn is needed to recapitalise the country's three main lenders is correct, despite the OECD questioning it earlier this week.

Janko Medja, head of Nova Ljubljanska Banka, said plans to sell a bank, as suggested by the Slovenia PM, won't happen for at least a year.

On Tuesday the OECD had said it believed the government may have underestimated the amount needed for recapitalising the banks.

2.57pm BST

Slovenia PM: asset sales plans due in 14 days

In Slovenia, seen as the next eurozone country to fall into trouble, privatisation plans will be put to the country's parliament in two weeks, according to the PM.

The plan to sell off state assets, including a bank, is aimed at avoiding a bailout.

PM Alenka Bratusek said she would send a stability programme to EU partners by May 9.

The country needs to raise €3bn to cover its budget deficit, recapitalise its state-owned banks and repay maturing debt.

Bratusek said

We will immediately start processes to privatise one or two companies. My wish is that one of those would be a bank

Slovenian Prime Minister Alenka Bratusek assured Brussels reforms will continue in the hope of avoiding a bailout.
Slovenian Prime Minister Alenka Bratusek assured Brussels reforms will continue in the hope of avoiding a bailout. Photograph: Xinhua/Landov/Barcroft Media

2.48pm BST

Herman speaks

President of the European Council tweets

1.39pm BST

German gold smuggler

It has just been pointed out by AP that the German man arrested trying to board a plane in Athens with gold in his luggage didn't have half a ton, but just 7kg.

A decimal point went astray in the original story. Police found 7.185kg, not 7,185kg.

It's not just the weight of the gold that has changed, it's value also fell 3% this week, below ,530, to its lowest point in almost a year.

1.32pm BST

Cyprus gold

Dijsselbloem says there will be on pressure put on Cyprus to sell its gold to fund the bailout.

He said

Selling some gold has always been a option put forward by the Cypriot authorities, but this is a decision to be made independently and it is not any demand from the Troika or Eurogroup.

And with that, the press conference has now ended.

1.28pm BST

Draghi confirms that he has told the Cyprus president that he cannot sack the country's bank governor, Panicos Demetriades.

He said the independence of the ECB is enshrined in EU law and will not interfere in the running of the bank.

1.23pm BST

Cyprus loan

Olli Rehn, the Finnish finance minister, says the €17bn Cyprus bailout was for net financing needs, while the new figure of €23bn is for gross financing.

The €23bn figure came from a leaked document which an exasperated Rehn said shouldn't be relied on.

It's like comparing apples with pears and ending up with oranges.

That's what happens when you write stories based on leaked documents.

Also asked how Cyprus will return to growth in just two years, he said

There is a lot of uncertainty for the exact growth of Cyprus

Interesting that the predictions are already being questioned when the loan hasn't even arrived yet.

1.11pm BST

1.10pm BST

Eurogroup statement on Cyprus

The eurozone finance ministers have issued a joint statement on Cyprus.

Here's a slice to whet your palate:

The Eurogroup notes with satisfaction that the Cypriot authorities have implemented decisive bank
resolution, restructuring and recapitalisation measures to address the fragile and unique situation of
Cyprus' financial sector. The Eurogroup commends the authorities for their demonstrated resolve in
implementing these important measures in a tight timeframe and reiterates its appreciation for the
efforts made by the Cypriot citizens over the last weeks.

Updated at 1.42pm BST

1.05pm BST

The ECB head Mario Draghi is at the Dublin press conference but has decided he has "nothing to add" to proceedings.

1.03pm BST

Cyprus loan increase "not discussed"

Austrian finance minister Maria Fekter says talk of increasing the €10bn Cyprus loan was not discussed in meetings this morning.

12.58pm BST

He also urges the Troika group of lenders and Greece to accelerate talks.

12.57pm BST

Dijsselbloem says Ireland is a living, breathing example that the adjustment programme works.

He adds that ministers would like to extend loans to Ireland and Portugal by another seven years.

12.54pm BST

Cyprus update

12.52pm BST

Dublin press conference begins

Jeroen Dijsselbloem, the Dutch finance minister, is now taking at the eurozone meeting in Dublin.

The conference can be watched here

He is currently running through the discussions that have been held, in particular the loan to Cyprus, which could be approved by April 24.

12.41pm BST

German man arrested over gold smuggling

An unusual tale from Greece, where a German national has been arrested for trying to board a plane at Athens International Airport with half a ton of gold in his luggage.

Officials also found nearly €300,000 in cash, according to Greek website ekathimerini.com

As Mike van Dulken points out

12.33pm BST

Cameron heads to Germany

David Cameron is on his way to Germany to meet up with Angela Merkel, and this time he's bringing the family.

Samantha Cameron and their three children will be coming with him, making it the first official trip they've been on with the prime minister.

Since the weekend is approaching, they've been invited to stay with Merkel and her publicity shy husband Joachim Sauer, at her Meseberg residence – the equivalent of Chequers.

Official conversation will focus on the Syrian conflict, European reform and the forthcoming G8 summit.

Updated at 12.49pm BST

11.35am BST

Germany: Cyprus loan non-negotiable

Confirming the line of Luxembourg's finance minister earlier, the German government has said the €10bn IMF loan is non-negotiable.

Eurozone finance ministers in Dublin gave political backing for the loan, but German government spokesmen said the amount was "not up for negotiation"

The international credit programme of about €10bn is of course very high in relation to the size of the Cypriot economy.

Updated at 12.23pm BST

10.32am BST

Cyprus bailout

Adding to Cyprus's woes on learning the bailout needed has increased to €23bn, Luxembourg's finance minister, Luc Frieden, told German radio this morning that the IMF's €10bn contribution cannot be increased.

He said

I believe the policy will be that the volume will remain at €10bn.

I know that right now [financing needs] are somewhat higher for the period from 2013-2016, but we cannot do any more.

Updated at 10.57am BST

10.22am BST

Irish bank debt maturities extended

Back in Dublin, our correspondent Henry McDonald writes

Ireland's finance minister has said he has secured a deal to extend Ireland's bank debt maturities by seven years.

Michael Noonan said he reached the agreement with the Republic's EU partners as he arrived in Dublin Castle this morning for the EU finance ministers' summit.

Eurogroup ministers are meeting first to discuss the proposed deal for Ireland and Portugal which would give both countries more time to repay the EU portion of the two countries' bailouts.

Speaking on his arrival at the meeting, Noonan said he was reasonably optimistic.

He said: "The discussions I have had over the last 48 hours were quite successful and there is certainly agreement in principle now.

"Whether there is any particular difficulty that arises from colleagues or not, we won’t know until it is openly discussed at meetings, but I am reasonably optimistic."

Irish finance minister Michael Noonan (right) and Greek finance minister Ioannis Stournaras at the Dublin meetings.
Irish finance minister Michael Noonan (right) and Greek finance minister Ioannis Stournaras at the Dublin meetings. Photograph: Aidan Crawley/EPA

Updated at 10.58am BST

10.03am BST

Eurozone industrial output

Eurozone industrial output fell more than expected in February.

It dropped 3.1% compared with a year earlier and was up just 0.4% compared with January.

Bad news was compounded by a revision of January figures from -0.4% month-on-month to -0.6%

10.00am BST

Cyprus by numbers

As we look forward to the eurozone finance ministers' meeting in Dublin, where it's hoped the refinancing of Cyprus can be agreed, here's a quick reminder of what money the country needs.

According to Reuters, Cyprus needs €23bn from the second quarter of 2013 to the first quarter of 2016.

The eurozone bailout fund will give €9bn, the IMF €1bn and Cyprus must find €13bn.

The €10bn international bailout will go on:

  • €2.5bn on recapitalising the remains of the banking sector
  • €4.1bn on redeeming maturing government debt
  • €3.4bn to cover fiscal needs of Cypriot government

And Cyprus will make up its contribution from:

  • Up to €10.6bn from resolution on Laiki bank, losses imposed on junior shareholders and deposit for equity swap of uninsured depositors at Bank of Cyprus
  • Up to €600m from corporate tax rise to 12.5% from 10% and doubling capital gains tax to 30%
  • Around €400m from gold sales
  • Up to €1bn from debt rollover
  • €1.4bn from privatisation
  • €100m from a reduction in interest rates on its Russian loans

A full breakdown of the numbers can be found here

Updated at 12.06pm BST

9.37am BST

UK construction data

UK construction output rose in February by 5.5% compared with January, but fell 7% year-on-year, according to the ONS.

The previous year-on-year numbers in January was -7.9%.

Updated at 9.37am BST

9.11am BST

IMF forecasts leaked

Bloomberg is running an article that, it claims, contains a draft of the International Monetary Fund's world economic outlook due to be released next week. It contains a lowered forecast for US economic growth, Bloomberg says, will GDP expanding by 1.7% instead of 2% due to the automatic budget cuts and tax changes that have kicked in this year. The global economy has been inched lower as well, from 3.5% to 3.4%.

Updated at 9.11am BST

8.53am BST

Osborne: Dublin meeting will be "low key"

The Press Association is quoting a Treasury source, saying that George Osborne will attend the gathering of EU finance ministers but it will be "rather low key from a UK perspective."This means that the UK won't be extending any bilateral loans to Cyprus and will not be closely involved in discussions about a banking union and the eurozone-wide banking supervisor. UK banks are not expected to be subjected to the authority. The treasury minister, Greg Clark, will also be attending.

8.42am BST

This WSJ comment piece about Cyprus is being tweeted this morning. The intro is pointed.

8.39am BST

Market update

The FTSE got off to a negative start this morning, down 20.31 points or 0.3% at 6395. Reuters attributes this to profit taking – the FTSE has been on a good run – and concerns that Cyprus and others will require deeper bailouts.

Meanwhile, the pan-European FTSEurofirst 300 index has also slipped 0.3% in early trading.

Richard Perry, chief strategist at Central Markets, said:

There is the potential that Cyprus may need more money, and that may be a reason for investors to book a bit of profit on the back of the recent strong run.

Updated at 8.40am BST

8.29am BST

Dijsselbloem speaks

Mind out markets, Jeroen Dijsselbloem, the Dutch finance minister and head of the Eurogroup, has given an interview. But it looks slightly more benign than his index-rattling efforts last month, when he said the Cyprus deposit-raid might be a blueprint for all future EU bailouts.

In his interview with the Irish Times he says the outlook for Ireland – one of five EU countries to receive a bailout (if you count Spain's banks) – is "rather positive". He dances around the notorious "template" comments about Cyprus, stressing that "we have to work towards a different way of working with banking crises in the future." But he uses a phrase – bail-in – that is a euphemism for tapping savers' deposits above €100,000 (and bondholders too). So the issue of deposit raids – Cypriots are facing a bigger wipeout than first thought after events of recent days – won't go away. He says:

In a post-crisis situation you need mechanisms to deal with these problems. We are working on those – in the resolution and recovery directive there will be a way of dealing with a ‘bail-in’, giving us the instruments to do bailins in a proper way.

He goes on to say that deposits above €100,000 are still fair game.

There will be a hierarchy and the uninsured depositors will be at the end of the hierarchy… I can’t speculate on what the outcome is, but they’re definitely included in the proposal that’s now on the table [to deal with future crises].

Updated at 12.50pm BST

8.17am BST

Henry McDonald, our Ireland correspondent, says today's meeting of Eurogroup finance ministers and heads of central banks in Dublin will be picketed by members of the Republic's largest police union.

Up to 30 members of the Garda Representative Association's central executive have gathered outside Dublin Castle where the Eurogroup event for finance ministers is taking place. 

The GRA say they have staged the picket in protest at what they call the "unfairness" of cuts imposed on rank and file police officers in the state. 

GRA general secretary PJ Stone said this morning: "We have been badly treated by our political masters, and having been repeatedly denied the opportunity to directly negotiate our pay, we must express our anger and frustration through our continued placard protest."

Their placards include: "IRELAND Support your Police" and "IRLAND Unterstutze Deine Polizei".

The sight of the union representing more than 11,000 Gardai picketing their own government organised pan-European event will be an embarrassment for the Fine Gael-Labour coalition. Ireland holds the EU Presidency up until midway through this year. 

The stability of the European financial system and the growth prospects for the Union are a key topic for today.

Tomorrow, ministers will look at more information sharing between tax authorities.

The sharing of information is to combat tax evasion is also on the agenda at Dublin Castle.

Updated at 8.23am BST

8.17am BST

Spotlight on Dublin and Berlin

Morning all – it is a day of gatherings for the eurozone. Given that it is the year of the gathering in Ireland (to celebrate the country's considerable cultural and genealogical wattage), there is appropriately enough a meeting of Eurogroup finance ministers in Dublin. They will discuss the ongoing crisis in Cyprus and then move on to the imminent one in Slovenia before, reportedly, agreeing to extend the bailouts for Ireland and Portugal. But the latter might not be announced until tomorrow.

In Berlin, David Cameron is meeting Angela Merkel. The election clock is ticking for both of them, with Merkel's coming later this year. Right now, one of them is more likely to be returned to power than the other – but Cameron still has two years to ensure that the eurozone does not continue to destabilise the UK economy and his election chances.

Updated at 8.22am BST

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G20 aims for stronger commitments against exchange rate manipulation. UK retail sales plunge in January, down 0.6% on the month, compared with expectations of a 0.5% increase. Eurozone trade surplus widens. US industrial production drops…



Powered by Guardian.co.ukThis article titled “Eurozone crisis live: Currency wars come to Moscow as G20 meets” was written by Josephine Moulds, for guardian.co.uk on Friday 15th February 2013 14.53 UTC

2.53pm GMT

And with that I will hand over the blog to Nick Fletcher. Thanks for all your comments and have a lovely weekend.

2.26pm GMT

US industrial output falls on weak manufacturing

US industrial production dropped unexpectedly in January, weighed down by weak manufacturing and mining.

Industrial output dropped 0.1% over the month, compared with a rise of 0.4% in December, and expectations of a rise of 0.2%.

But Markit points out that the three-month trend is positive, with production rising by 1.6% compared with the previous three months.

2.19pm GMT

Eurozone trade surplus masks worrying developments – economist

Just back to the eurozone trade figures briefly (see 10.14am), which showed a healthy-looking surplus in December.

Howard Archer of IHS Global Insight notes that the underlying picture was not so encouraging as both exports and imports fell appreciably in December and over the fourth quarter of 2012. He writes:

This suggests that the markedly increased 0.6% quarter-on-quarter drop in Eurozone GDP in the fourth quarter of 2012 was significantly influenced by a weakened export performance. Meanwhile, the appreciable drop in Eurozone imports is consistent with weakened Eurozone domestic demand in the fourth quarter.

1.49pm GMT

Bernanke syas US in line with G7 stance

Fed chairman Ben Bernanke is now speaking at the G20. He says a strong US economy equals a strong world economy.

The US is acting in line with the position of the Group of Seven nations, he says, by using domestic policy tools to boost growth and reduce unemployment.

Consistent with the G7 policy statement, the US is using domestic policy tools to advance domestic objectives.

Updated at 2.00pm GMT

1.33pm GMT

Putin tells G20 to get their houses in order

Russian president Vladimir Putin, meanwhile, told the Group of 20 nations that it was vital to eliminate economic imbalances and have a clear strategy on borrowing to put the global economy on a sustainable growth path.

The days when economic crises had an isolated impact are gone. Problems in the US and the eurozone affect each country’s economy.

1.26pm GMT

Lagarde says talk of currency wars is “overblown”

Now IMF chief Christine Lagarde is up. She too says talk of currency wars is “overblown”.

Yes, the euro has appreciated and yes the yen has depreciated, but that is the result of good policies in the eurozone and looser policy in Japan. There is no major deviation from fair value of major currencies.

1.20pm GMT

G20 statement will not make commitments re fx rates

The G20 draft will make not mention a commitment to not target foreign exchange rates, Reuters is reporting, citing a G20 delegate.

Headlines on the wires suggest the latest draft communique will repeat previous language on avoiding excessive foreign exchange volatility and disorderly movements in foreign exchange rates.

But the G20 deputies did not single out Japan in their disucssions about the communique, the G20 delegate said.

Reuters says the draft also reaffirms commitments to medium-term fiscal plans but says some countries need to take into account near-term considerations.

It does not include this week’s G7 language on the need to use fiscal and monetary policies only for domestic objectives.

The (remarkably talkative) G20 delegate said the deputies debated whether fiscal consolidation has been too aggressive or whether the lack of fiscal consolidation has led to too much uncertainty.

Very few pictures coming through from the meeting, but here’s the OECD’s Angel Gurria giving Russia’s finance minister a big hug.

12.01pm GMT

Portuguese PM opens door to cutting 2013 forecast

Back to Portugal, where the prime minister is sounding downbeat about the country’s prospects this year. Pedro Passos Coelho suggested the government may have to cut its forecasts for this year, saying:

The [fourth quarter] results leave us with a level of foreign demand that, if extended into 2013, will not allow us to maintain the projections we have made.

Portugal is in its third year of recession, as it labours under a crippling austerity programme imposed by the country’s international lenders.

10.59am GMT

Meanwhile, over in Moscow, the governor of the Bank of Japan Masaaki Shirakawa is saying countries must be aware of the impact of domestic policies on the rest of the world.

While the head of the OECD Angel Gurria tells CNBC we are further away today from a currency war then we were two or three years ago.

10.47am GMT

UK consumers are skint – Guardian’s Larry Elliott

Here’s our economics editor, Larry Elliott, on the UK retail sales figures. He says, while you can blame the snow for some things, the real reason behind poor sales is that consumers don’t have the money to splash out. More online shortly…

The best explanation of all, therefore, is the most obvious one: consumers are skint. Real incomes, according to the ONS, are back to 2003 levels, and with petrol prices again rising sharply there is simply less money available for discretionary spending.
But isn’t this inconsistent with an improving labour market, which should be leading to an increase in aggregate incomes? Not at all. Rising employment masks two big trends: the increase in part-time work and the willingness of workers to accept cuts in real (inflation-adjusted) pay in order to avoid losing their jobs.
As a result, spending power for millions of Britons is weak and is likely to remain so. That’s why the ONS is reporting that the proportion of on-line sales remained above the 10% mark in January. Normally, there is a spike in internet buying in December as consumers load up on CDs, books and clothes for Christmas presents, and then the percentage falls back. This year it has remained high, a sign that Britain has not lost the spending habit but is being forced to shop around for bargains.

10.34am GMT

Brazil will not allow over-appreciation of real

Brazil’s finance minister Guido Mantega is now making his voice heard over in Moscow at the G20. He says Brazil will not allow an over-appreciation of the real.

Mantega is thoguht to have coined the term “currency wars” to describe the series of competitive devaluations adopted by rich nations to bolster their exports to the detriment of emerging market nations. Reuters reports:

Since then Brazil has actively sought to depreciate its currency, the real, to protect local manufacturers of everything from shoes to suits and make its exports more competitive. It has taken bold action to curb speculative capital inflows with higher taxes.

10.14am GMT

Eurozone trade surplus widens

[Clarification: Using the monthly figures (as usual) apologies to those who prefer yearly statistics]

The eurozone trade surplus widened in December, with imports falling at a faster rate than exports.

Eurostat said the unadjusted trade surplus was €11.7bn in December. That is higher than the €8bn a year earlier, but lower than forecasts for a rise to €13.1bn.

The biggest single improvement was in Italy, which swung to a €9bn surplus in the first 11 months of 2012, from a deficit of almost €27bn a year earlier.

Updated at 11.33am GMT

10.06am GMT

Chris Williamson of Markit is more upbeat.

While the snow clearly had an impact on sales, the decline was nothing like as severe as we’ve seen in previous years. For example, the 0.6% decline in January compared with a 1.9% monthly fall in December 2010, when the country was also hit by heavy snow. The data therefore add to other survey evidence which suggests the economy got off fairly lightly from snow disruption, further allaying fears of a weather-related “triple dip” recession. We should also remember that retail sales are not used in the calculation of the first estimates of GDP, which the PMIs suggest is still on source to recover from the downturn seen late last year.

10.04am GMT

Rob Wood of Berenberg Bank agrees that the snow is not the whole picture.

The snow problem shouldn’t disguise the real problem, however. The underlying picture is that the economy is bouncing along the bottom, so weather disruptions can easily tip it into negative territory.

The underlying story is a familiar one for UK households, which have been fed a diet of meagre wage growth and above target inflation for much of the past four years. As inflation heads up again, those meagre wage rises will stretch even less far and consumption will struggle to get going for a little while yet. The particularly disappointing aspect of today’s data is that the growth in the value of spending on the high street also slowed to a standstill as households presumably tried to boost their savings.

The chances of a triple-drip had receded a little with improved data in recent weeks, but in truth the data had not pointed to much momentum. And this release brings a dip back on the table. If the snow disruption is reflected in other industries, with construction being the most likely candidate again, then we could well see a quarterly contraction in Q1 2013.

10.02am GMT

Here’s Howard Archer of IHS Global Insight on the dire UK retail sales figures.

Even allowing for a substantial hit to retail sales from the snow, the further fall in January fuels concern that consumers may be becoming more careful in their spending as consumer price inflation moves back up and squeezes purchasing power.

A serious concern for retailers – and the economy in general – is that consumers’ purchasing power is coming under renewed pressure from a move back up in inflation while earnings growth remains muted.

9.52am GMT

450 new eBay jobs in Ireland

Briefly over to Ireland where there is some good news on the jobs front, with the announcement of 450 posts from eBay in the border town of Dundalk. Our correspondent in Dublin Henry McDonald reports:

The Taoiseach Enda Kenny visited eBay’s operation centre in Dundalk this morning at the launch of the new jobs.

eBay has joined the likes of Facebook, Twitter, Linked-In and Google in establishing their European base in the Republic.
The new posts will help provide the growing European customer base of the company’s eBay Marketplaces and PayPal businesses with an enhanced experience in the areas of customer services, sales and compliance. The new positions, which are in addition to 1,000 new jobs announced by PayPal last year, are located within its Customer Services team and also based at the Dundalk facility.

Gary Hagel, Senior Director, eBay Customer Experience, UK, Ireland and Rest of Europe said: “eBay’s continued commitment to its customers is underlined through this investment in customer services team members fulfilling a variety of roles to make eBay an even better place to shop and sell. Ireland is a centre of excellence for our Global Customer Experience function and the country provides a highly-skilled workforce for eBay with the required technical and language skills, an attractive research environment and proven track record on delivery.”

Louise Phelan, Vice President Global Operations EMEA at PayPal said: “Today’s announcement is fantastic news for the Dundalk area. We are looking forward to welcoming our eBay colleagues at the PayPal site in Dundalk. Last year was a great year for PayPal in Ireland. Our Dundalk site was operational within 11 weeks of the contracts being signed. We currently have over 230 people employed on site there and we look forward to continuing to expand this number in 2013.”

Updated at 9.57am GMT

9.44am GMT

UK headed for triple-dip?

Just to recap, the UK economy shrank in the final three months of 2012. If it contracts again in the first three months of this year, that will plunge the UK into its third recession in four years… the dreaded triple-dip.

That would leave chancellor George Osborne’s reputation in tatters.

And consumer spending is a huge part of the UK economy, as noted by Sky’s Ed Conway.

9.41am GMT

Here’s James Knightley from ING on the impact of retail sales on the pound.

The ONS stated that there was an impact from snow which had particularly hurt small grocers. This adds to the negative newsflow on the UK with worries over the UK’s EU referendum and the Scottish independence vote along with a potential rating downgrade all helping to keep downward pressure on sterling.

9.40am GMT

Rather than the snow, some analysts see a more fundamental issue at play in the UK retail sales figures.

9.39am GMT

Sterling tumbles on poor retail sales figures

The news has sent the pound tumbling to its lowest point in more than six months against the dollar, at $1.5470.

9.36am GMT

Brits go on diet as snow falls

The main factor driving UK retail sales lower was a slump in food sales, with food sales down 1.6% in January, the largest monthly fall since May 2011.

Even more starkly, food sales were estimated to have fallen 2.6% year-on-year (seasonally adjusted), to the lowest level since April 2004.

The ONS says small grocers blamed poor sales on the heavy snowfall at the end of the month.

As energy and futures trader Nicola Duke notes, the figures do seem to represent reality out on the streets.

Updated at 9.38am GMT

9.32am GMT

UK retail sales slump in January

Ouch. UK retail sales slumped dramatically in January, down 0.6% on the month, compared with expectations of a 0.5% increase.

That’s terrible news for George Osborne as it will reignite fears that the UK is headed for a triple-dip recession.

9.23am GMT

We’ve got UK retail sales figures for January coming up and the forecasts are pretty upbeat. Economists expect December’s 0.3% decline to swing to a 0.5% rise in sales over the month.

Although Marc Ostwald of Monument Securities warns that the data between December and February is often very wide of expectations. Eight minutes until we find out…

9.15am GMT

Tensions in Greece continue to flare

Disabled citizens have gathered outside the main offices of the finance ministry in Athens this morning to protest against reductions to their salaries and pensions imposed as part of a broader government austerity program. Ekathimerini reports:

The union representing the country’s disabled is lobbying the government to provide relief to the retired and working disabled and for guardians of those with heavy disabilities.

Unionists have demanded a meeting with Finance Minister Yannis Stournaras, Labor and Social Insurance Minister Yiannis Vroutsis and others to discuss their grievances.

While Greek students celebrated Valentine’s Day with a protest march last night, demonstrating against reforms to the education system.

And in the country’s second largest city, Thessaloniki, demonstrators gathered to protest against the death of 38-year-old Babakar Ndiaye from Senegal who died after falling from a height of 7m to the train station in Athens while being chased by the municipal police for selling goods in the street.

9.00am GMT

Looking back at yesterday’s figures, Draghi says fourth quarter GDP data was more negative than the ECB expected.

8.53am GMT

Draghi says currency chatter is fruitless

Now it’s ECB chief Mario Draghi’s turn to speak out against currency manipulation. Over in Moscow for the G20, he says:

Currency chatter is inappropriate, fruitless and self-defeating.

He says the ECB mandate is mid-term price stability in both directions.

The exchange rate is not a policy target but it is important for growth and price stability, he adds, noting the fundamental issue at the heart of these discussions.

He too says the euro is not overvalued, saying that nominal and real euro exchange rates are around their long-term averages. He declines to comment on the likely wording of the G20 statement.

He also weighs in on the austerity vs growth debate, saying:

We don’t believe that inflating budget deficits to create demand is sustainable.

No pictures of Draghi in a wooly hat yet, but here’s a reminder of another central bank governor enjoying the snow at the 2010 G7 meeting…

Updated at 8.53am GMT

8.43am GMT

As the meetings and photo shoots of the Group of 20 jamboree begin, there are those that question how useful these events are. Paul Donovan, senior economist at UBS, says:

And so another taxpayer financed weekend minibreak gets underway, as twenty countries fly their officials around the world to have their photograph taken and to issue a pre-agreed communiqué. At a guess the communiqué will say that the G20 likes growth and doesn’t like recessions.

8.28am GMT

Spanish price inflation eases

Spanish inflation eased in January, according to data from the national statistics agency.

CPI rose 2.7% in January, compared with the same month last year, down from 2.9% in December; while the EU-harmonised annual price inflation came in at 2.8%, compared with 3% in December.

8.24am GMT

Portugal eyes full return to bond markets

There’s also some better news out of Portugal, despite the dire GDP figures out yesterday, which showed its economy shrinking by 1.8% in the fourth quarter of 2012. The FT reported last night:

Portugal’s debt agency is confident that the country is poised to regain full access to bond market funding in the next few months and exit its bailout programme, despite its heavy debts and recession-plagued economy.

“I expect we will have full market access in the next few months,” João Moreira Rato, chief executive and chairman of IGCP, the Portuguese treasury and government debt agency, told the Financial Times.

“We are very close to it,” he added. “It looks like everything is moving in the right direction.”

As independent economist Shaun Richards notes, this demonstrates how far removed the financial markets are from reality. He noted the dire economic problems that have been inflicted on Portugal as a result of austerity in his blog yesterday.

Updated at 8.57am GMT

8.19am GMT

Weidmann says ECB won’t target euro

Ahead of the meeting, Germany’s central bank governor Jens Weidmann spoke to Bloomberg. And, of course, the subject of currencies came up.

Weidmann said the euro was not seriously overvalued, and that the ECB would not cut rates just to weaken the euro.

He said ECB chief Mario Draghi was not trying to talk down the euro at the recent press conference. Sticking with the ECB, he said the central bank may be forced to show its hand on the outright monetary transactions bond-buying programme.

He too sees a gradual recovery in the second half.

On Ireland, he said the recent deal to switch a costly promissory note, used to pay for the rescue of failed Anglo Irish Bank, into less expensive sovereign bonds, could breach the ban on monetary state financing.

Finally, he said rumours of his resignation were greatly exaggerated. Keen readers of the blog may remember Twitter erupted with news of Weidmann’s imminent departure last month, only for the Bundesbank to deny it within minutes.

Bloomberg is running both a full story and some key quotes from the interview.

8.01am GMT

G20 currency statement won’t name Japan

Earlier this week, the G7 issued a joint statement reaffirming its “longstanding commitment to market determined exchange rates”. But this show of unity was quickly undermined by off-the-record briefings critical of Japan.

It is thought that G20 hosts Russia would like to echo the thrust of the G7 text when they issue their communique on Saturday, but there will no doubt be substantial wrangling over the wording today and tomorrow.

Russian finance minister Anton Siluanov said yesterday:

The G-20 countries have always held the position that currency policy should be based on market conditions.

Russia has already said that Japan will not be singled out in the text. Siluanov’s deputy, Sergei Storchak – who is Russia’s G20 representative or ‘sherpa’ as they are known – told reporters:

There will be no specific mention of Japan – we are all in the same boat.

7.53am GMT

Good morning and welcome back to our rolling coverage of the eurozone crisis and other global economic events.

Today the finance ministers and bank governors of the Group of 20 nations will start their two day meeting in Moscow in an attempt to reach a common stance on currency manipulation.

Japan will be under pressure for its expansive policies that have driven down the value of the yen.

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Athens votes to investigate George Papaconstantinou for allegedly tampering with ‘Lagarde list’ of potential tax evaders. Eurogroup to name new head at the meeting on Monday. Poor retail sales in December point to triple dip recession in the UK economy…



Powered by Guardian.co.ukThis article titled “Eurozone crisis live: Greece to probe ex-finance minister over tax scandal” was written by Josephine Moulds and Nick Fletcher, for guardian.co.uk on Friday 18th January 2013 16.06 UTC

4.02pm GMT

IMF says Greece faces funding gap of up to €9,5bn for 2015.16

Despite fairly upbeat comments on Greece earlier from Christine Lagarde, there are rather more mixed noises now from the IMF.

The IMF has estimated that Greece faces a funding gap of €5.5bn to €9.5bn for 2015 and 2016, the first time it has put a figure on the country’s financing needs beyond 2014. This contrasts with the EU, which estimated the amount at the lower end of that range at €5.6bn. Here’s the latest IMF report on the country.

IMF mission chief for Greece Poul Thomsen said the fund had received promises from its European partners that they would continue to support Greece “even if they are not concrete about it.”

According to Reuters Thomsen said there was renewed interest in Greece from investors but challenges remained. The Greek government was determined to deal with tax evasion but so far the IMF had not seen any significant impact on tax collections.

There were also reports the IMF wants haircuts on bilateral Greek loans from Europe, meaning another loss which could put investors off.

Thomsen also said the Greek economy was becoming more competitive, while the IMF reported put out some new GDP estimates for the country:

Updated at 4.06pm GMT

3.49pm GMT

And still with Cyprus, Moody’s had downgraded the country’s covered bonds to CAA1.

Updated at 3.50pm GMT

3.35pm GMT

Greek debt write down “a mistake” says Cyprus minister

Cyprus finance minister Vassos Shiarly said the island had formally requested a five year extension from Russia to repay a €2.5bn loan due in 2016.

In an interview with Reuters he also said the private sector writedown of Greek debt in early 2012 was a mistake because of the upheaval it caused in the eurozone.

Cyprus is waiting for its own bailout, and Shiarly said he did not rule out privatisations if that was needed to seal the deal. He said:

The Greek [debt writedown] was a gift to Greece. We are not asking for a gift. We are asking for understanding, and a loan on fair terms so we can overcome these financial difficulties we are facing at the moment.

The island’s banks were hit by the write-down of Greek debt, leading to it asking for financial help from the EU and IMF in June last year.

3.26pm GMT

Berlusconi gains ground in opinion polls

Back with Italy, and former prime minister Silvio Berlusconi is narrowing the gap in opinion polls.

Pier Luigi Bersani’s centre-left coalition is still leading the way, but Berlusconi is now 6 percentage points behind, a 4 percentage point improvement on a week ago. As Reuters points out:

Berlusconi extended his surge in Italy‘s opinion polls on Friday, increasing prospects that the centre-left Democratic Party now leading the race will have to seek a pact with Mario Monti’s centrist bloc.

3.15pm GMT

Well, well…

3.08pm GMT

US consumer confidence hits lowest level since December 2011

US consumer sentiment fell for the second month running, to reach its lowest level since December 2011.

The Thomson Reuters/University of Michigan index came in at 71.3 for January, down from 72.9 the previous month and below estimates of around 75. The recent fiscal cliff standoff seemed to do much of the damage to confidence, the survey indicated.

Michael Woolfolk at BNY Mellon in New York told Reuters:

It’s a January figure, therefore it’s more important than those from other months because we are curious to know what the impact on consumers will be from the hike in the social security tax.

That is undoubtedly going to hit discretionary spending. So this may be a signal of things to come.

Annalisa Piazza at Newedge Strategy was more positive:

[The] survey doesn’t seem to be justified by fundamentals. Some uncertainties with regards to the future outlook remain but we suspect part of the decline in household confidence will be corrected in the coming weeks as the moderate recovery story is still valid.

The Dow Jones Industrial Average has not really been moved by the report, currently up around 4 points or so.

2.40pm GMT

Papaconstantinou calls for opportunity to clear his name

Former finance minister George Papaconstantinou has issued a statement following parliament’s decision to investigate him for his handling of the infamous Lagarde list. Helena Smith writes:

Papaconstantinou’s reaction has been swift and to the point. In a sign of the defense he is likely to take, the ex-economics chief said he was “at the disposal” of the special parliamentary committee which, as of Monday, will begin probing allegations that he not only doctored the list, deleting the names of relatives, but failed to pursue tax evaders.

“The only thing that I want is to be given the opportunity to clear my name from the gross fabrication against me,” he said, “and for accountability to be attributed where it should be.”

Wading into the furore over the list which bears her name, Christine Lagarde who has been busy speaking with a number of Greek media outlets this week, told MEGA TV that at Papaconstantinou’s request she handed him the list because he seemed determined “to pursue every avenue” in the battle against tax evasion.

“Not enough has been done,” she said turning to the subject of tax avoidance. “When we look at revenue it is not on target,” she added, exhorting the government to get serious about rooting out tax dodgers if it wanted to receive further finance assistance from the IMF. “I have a long-standing affection for your country,” she said predicting that if Greece continued to enforce reforms it would balance its books this year and see growth in 2014.

1.30pm GMT

France will not grow unless eurozone does – French finance minister

Now French finance minister Pierre Moscovici is speaking (although not in Paris, he’s in Dublin).

France will be unable to return to growth unless the euro area pulls out of recession he says. The eurozone is in better shape and there are no doubts about its future existence, he adds.

And with that I’m handing over to my colleague Nick Fletcher.

Updated at 2.17pm GMT

1.11pm GMT

Bank refinancing by ECB will be key in 2013

[Apologies for the repetition, my colleague Nick Fletcher kindly covered this for the first time while I was at lunch - JM]

Over to Paris, where European Central Bank board member Benoit Coure has been speaking at an economic forum.

Banks will continue to need recourse to European Central Bank refinancing this year despite a stabilisaiton of the crisis, he said.

He also ECB decisions were not the key element in solving the crisis, but rather governments carrying out reforms.

The resolution of the eurozone crisis does not mainly depend on regulatory decisions nor decisions taken by the ECB. It depends mainly on the will and commitment of states to reform their economies, on the one hand, and on the other, to improve the functioning of the eurozone, which is to say the institutions that allow it to be more resilient to shocks like those we’ve seen since 2007.

Updated at 1.57pm GMT

12.55pm GMT

Depressing news from Greece (which, RobertSchuman, I would say is worse than gloomy or miserable, but less economics-related), where reports have surfaced that a tree Plato apparently sat under has been chopped down for firewood. Christina Flora writes on the blog Greek Reporter:

Greeks, desperate to find fuel to stay warm because they can’t afford heating oil that has been hit with big tax increases, have been taking to the woods and even city parks to cut down trees and now authorities said someone has felled the olive tree under which Plato sat in ancient times.

Police said they believe at least two people cut down the famous tree because it was massive and heavy. Some residents of the area reportedly said that homeless people cut the tree, while others allege that a group of gypsies did it.

Plato’s Olive Tree, was said to be a remnant of the grove within which Plato’s Academy was situated, which would make it approximately 2,400 years old.

Our correspondent in Greece, Helena Smith, wrote about the rise of illegal logging back in November last year.

Updated at 1.51pm GMT

12.36pm GMT

Italian growth forecast cut

The Bank of Italy has cut its economic forecast for the country.

It now expects a drop of 1% for 2013, compared to a previous forecast of a 0.2% decline,l made three months ago. The concensus forecast had been for a fall of 0.9%. It said the international environment had worsened and credit conditions were still restrictive.

The Bank expects a recovery in the second half, paving the way for growth to resume in 2014. Not good news for whoever does come out on top in the forthcoming elections.

12.27pm GMT

Banks will continue to need access to European Central Bank funding despite an easing of the debt crisis, said one of its board members.

Speaking at a conference in Paris, Benoit Coeure said, according to Reuters:

Refinancing at the central bank will remain an important factor of security throughout 2013.

He added that a resolution of the crisis did not hinge on ECB decisions, but on reforms by the states.

Updated at 12.29pm GMT

12.04pm GMT

Over to Greece, where the decision to investigate former finance minister George Papaconstantinou has been met with thinly veiled disgust, says Helena Smith our correspondent in Athens. She writes:

Far from bringing the much touted “catharsis” that Greece’s political elite had promised, parliament’s handling of the notorious Lagarde list has exacerbated the widespread distrust Greeks have in their institutions.

Hopes had been high that after three years of ruthless austerity, the “little man” would finally see the establishment assume a modicum of responsibility for the country’s economic mess. The tally of suspected tax evaders – well-heeled Greeks who had chosen to squirrel their hoards away in the Geneva branch of HSBC – highlighted the inequities of the debt crisis precisely because successive governments had failed to act on it.

For many, the so-called Lagarde list amplified, in the most egregious way, an indisputable fact: that while low-income Greeks and pensioners have paid a heavy price for the crisis, the rich have got off scot-free.

After yesterday’s marathon 16-hour debate, it is the high drama that marked the debate, and the way the vote was conducted, that has left a bitter taste. “It was pure theatre that, at this stage, society has no tolerance for,” Spyros Soumelidis, who edits the daily newspaper Greece Tomorrow, told the state-run TV channel NET. Ordinary Greeks might not have been convinced by Papaconstantinou’s line of defence – not least his claims that it would have been “idiotic” to delete the names of relatives from data.

But after last night’s parliamentary antics, many believe he is being made the fall-guy by a fragile government determined to save its own skin by orchestrating a vote that spared Papconstantinou’s successor, the socialist Pasok leader, Evangelos Venizelos, from also being investigated.

Opposition saw an inquiry of Venizelos as imperative, as he also failed to act on the list. “In parliament yesterday, the government majority won [along with] the cover-up of the scandalous handling of the Lagarde list,” said Dimitris Papadimoulis, parliamentary representative of the radical left main opposition Syriza party.

“But society lost and it lost overwhelmingly,” he said. The chance to get to the bottom of tax evasion – the single biggest drain on the debt-choked Greek economy – had been lost. And with it a real catharsis, or clean-up, of Greece’s corrupt political scene.

Updated at 12.46pm GMT

11.32am GMT

David Cameron’s no-show in Amsterdam (see 7.52am) has prompted plenty of reaction, none better than the poem by reader ratherbered, in the comments below.

So
Farewell
Then
David Cameron
You so nearly
Scored
A great own goal
But
Just before the ball
Came across
The ref
Abandoned the match
Now today your coach says
Cameron has a badly
Twisted tongue
And is out for the rest
Of the season

Apologies to E.J.Thribb (17)

Great stuff. Thank you!

11.16am GMT

More from Germany’s finance minister, Wolfgang Schauble, who said there is no plan to boost the European Stability Mechanism bailout fund for a direct recapitalisation of eurozone banks.

11.10am GMT

Bank of Engalnd must keep open mind on new stimulus tools

The Bank of England must keep an open mind on new and unorthodox stimulus tools, said the newest member of the Bank of England’s monetary policy committee, Ian McCafferty.

McCafferty appears to have broken his own embargo, appearing on Bloomberg TV to talk about his first speech in the job which, according to the press release, was…

NOT FOR RELEASE BEFORE 12:00 HRS (GMT) ON FRIDAY 18 JANUARY 2013.

Ah well, we’ll have a full story on the speech online shortly, but not before 12pm.

Updated at 1.54pm GMT

11.02am GMT

Eurogroup to name new chief on Monday

Back to the race to the head of the Eurogroup. Germany’s finance minister, Wolfgang Schauble, who has long supported Jeroen Dijsslebloem for the post, said this morning that the group would decide on its new leader on Monday.

There will not, however, be a decision on Cyprus aid on Monday, he said.

10.42am GMT

Lagarde says no new austerity measures required in Greece

IMF chief Christine Lagarde says the Greek economy should grow next year, and the stricken country will be able to return to international debt markets by 2016.

In an interview with Kathimerini’s editor-in-chief Alexis Papachelas on Skai TV’s New Files, she said that no new austerity measures would be required if structural reforms are implemented.

Our analysis is that if the structural reforms are conducted and therefore if there is a proper transmission of the salary cost reduction into prices, no additional cost reduction or pension reduction will be needed.

If, however, the structural reforms were not to take place, if the closed professions were to maintain their privilege, if the multiple licenses, bureaucratic hurdles and impediments to growth were to stay, then we would face another situation where the fiscal deficit needs to be tackled and therefore more cuts would be needed.

Updated at 10.44am GMT

10.17am GMT

Sterling falls on UK retail sales data

Back to the UK and the tumbling pound. Sterling fell on the gloomy retail sales data, to hit an eight-week low against the dollar.

Independent economist Shaun Richards asked earlier this week if this would be the year the pound collapses. His conclusions (pre-today’s data)…

If you look at the UK economy in isolation it is easy to argue that the pounds value should fall. The catch is when you ask against what exactly?

He asked again on Twitter today, if everyone was now down on the £ as a result of retail sales. Some early responses…

Updated at 10.24am GMT

10.13am GMT

Spain brews up its own tax scandal

With the ongoing tax scandal in Greece, it seems Spain now has one brewing of its own. Our correspondent in Madrid, Giles Tremlett, writes:

Spain’s prime minister Mariano Rajoy was in ebullient form in an interview with the Financial Times this week, proclaiming that: “The second half of 2013 is when we will start to see a recovery, and it will come through very clearly in 2014.”

But now he has a full-grown domestic political crisis on his hands – with El Mundo newspaper (paywall) revealing that, as recently as 2009, his party was part-paying salaries to senior officials in black money. A €22m Swiss account controlled by former party treasurer Luis Barcenas is at the centre of the scandal.

As austerity bites, taxes rise and services are cut, Spaniards will want to know – if the allegations are true – why Rajoy’s party felt it did not have to pay taxes and why it was allowed to happen while the prime minister was party boss.

For the moment, party officials deny wrongdoing. But Rajoy’s biggest rival in the party, Esperanza Aguire, has already come out fighting, calling it a “grave institutional crisis”. “The courts should act, interrogating whoever needs to be questioned and whoever falls must fall. And quickly.” Could she be talking about Rajoy?

9.53am GMT

My colleague Larry Elliot has the following take on retail sales, up online shortly. He writes:

Britain’s retailers endured a tough Christmas with the volume of retail sales falling by 0.1% in the busiest shopping month of the year, the office for national statistics said.

High street and online spending in the three months to December – a better guide to the underlying trend – fell by 0.6%, a weak performance that will intensify City speculation that the economy contracted in the last quarter of 2012. Supermarkets, department stores and stores selling household goods all struggled, but discounting appeared to help clothing and footwear outlets.

Although some stores reported a last-minute rush to the shops in the days before Christmas, the ONS data suggests that hard-pressed consumers kept a tight rein on their spending. The official figures cover the period up until December 29.

Only strong sales of petrol following a fall in pump prices prevented a bigger monthly decline, the ONS said. Excluding fuel there was a 0.3% reduction in retail sales in December.

9.47am GMT

The strong performance of internet sales is, of course, at least part of the reason that Britain’s high streets are undergoing such dramatic change.

HMV, Comet, Jessops and Blockbuster all cited the influence of the internet in their demise.

9.44am GMT

Analysts downbeat on UK retail sales

Early reaction to the UK retail sales (see below), is pretty downbeat. Vicky Redwood at Capital Economics say the figures point to Britain’s economy shrinking in the fourth quarter. If we haven’t said it enough times already, that puts Britain on the road to an unprecedented triple-dip recession.

Anyway, Redwood said:

Sales in Q4 as a whole were down by 0.6% – yet another bit of evidence that the economy probably contracted at the end of last year. Online sales were unsurprisingly the strongest performing sector. Clothing did ok too. But food, department store and household goods sales all dropped.

At least the “sales” period at the start of January has reportedly been reasonably strong. And growth of the retail sales deflator in December was broadly steady – supporting other evidence that retailers held back from any panicked price discounting and so preserved their margins. Nonetheless, with consumers’ real pay still falling, demand on the high street is unlikely to improve in the foreseeable future.

9.39am GMT

UK retail sales miss forecasts

And there are some miserable retail sales figures out of the UK. The Office for National Statistics said retail sales (excluding fuel) dropped 0.3% in December, compared with expectations of a 0.1% increase.

That annual increase of 1.1% was the weakest since 1998. Household goods suffered the biggest decline on the month, with sales dropping 3% from November. Over the year, clothing and footwear was the worst performer (if you ignore fuel), with sales down by 3.5%.

Internet sales were still rising though, with 10.6% of all purchases in December made online rather than in the shops. That’s 1.2% higher than December 2011.

Updated at 9.45am GMT

9.28am GMT

Bad loans increase in Spain

Over to Spain, where there’s gloomy news out of the central bank. Bad loans in the stricken country rose to 11.4% in November – a new high – from 11.2% in October. The Bank of Spain said loans that fell into arrears rose to €191.6bn in November.

9.14am GMT

David Cameron may have postponed his speech (see 7.52am) but he can’t escape the thorny subject of Europe. Last night, US president Barack Obama brought it up again.

During a conversation about the Algeria hostage crisis, Obama told the prime minister that he “values a strong UK in a strong European Union”.

9.03am GMT

Athens could see more one-day metro strikes

Greeks are struggling to get to work in Athens again today, as the metro workers host a second day of strikes in protest against government plans to cut wages.

Now ekathimerini is reporting that metro employees are mulling the possibility of carrying out rolling 24-hour strikes.

Speaking to Skai TV, the head of the SELMA union of metro workers, Manthos Tsakos, said that the option of a long-term strike is being examined by employees.

8.35am GMT

Dijsselbloem to present Eurogroup roadmap

There’s more jostling for position over the upcoming vacancy as head of the group of eurozone finance ministers.

Dutch finance minister Jeroen Dijsselbloem, who is seen as the frontrunner for the Eurogroup job, will present his road map for the eurozone at a meeting of finance chiefs on January 21, according to reports.

Luxembourg prime minister Jean-Claude Juncker, how currently heads up the group, told Germany’s DPA news agency that Dijsselbloem will explain “how he intends to craft the itinerary for the next few years.” Juncker said:

There’s a desire, and this desire is understandable, that the upcoming Eurogroup chief submit a program. I did that in January 2010.

As reader northland noted yesterday, French finance minister Pierre Moscovici has raised concerns about the process used to find the new Eurogroup head.

Frankfurter Allgemeine Zeitung reported yesterday that Moscovici had criticized Dijsselbloem for not having outlined his vision for economic and financial policies, and said a decision on the position would not be made until February.

8.22am GMT

China bounces back in fourth quarter

Also overnight, China released mixed GDP data. On the one hand, it showed the economy sliding to its slowest growth in 13 years. On the other hand, growth picked up in the final quarter, fuelling hopes that the world’s second largest economy is emerging from the slump. 

The boost was driven by state investment in infrastructure projects and efforts to get consumers and companies to spend.

Government figures showed growth picked up to 7.9% in the final three months of 2012, from 7.4% in the previous quarter. For the full year, China recorded growth of 7.8% (which sounds pretty healthy, compared with predictions that the UK economy was flat last year).

Dariusz Kowalczyk, an economist at Crédit Agricole in Hong Kong, said the growth data “was the best we could have wished for”.

There have been fears that China would suffer a sharp slowdown, as global turmoil, feeble domestic demand and a weak property market weighed on growth. But Kowalczyk said these figures suggested China had comfortably escaped a so-called hard landing.

8.06am GMT

In case you’re wondering what’s happened to my colleague Graeme Wearden, he has turned his attention to the snow blanketing parts of the UK, on the Guardian’s live blog of transport disruptions and general weather-inspired chaos.

It will, at least, put him in the mood for Davos, where he will be live-blogging direct from the World Economic Forum next week.

Updated at 8.29am GMT

8.04am GMT

Today’s agenda

Otherwise, this morning we’ve got retail sales figures out of the UK and there are some speeches to watch out for later in the day.

  • Italy industrial figures for November: 9am
  • UK retail sales for December: 9.30am
  • Merkel and EU parliament president Schulz meet in Berlin: 9.30am
  • ECB’s Coeure speaks in Paris: 11am
  • Bank of England’s McCafferty speaks in London: 12pm
  • Berlusconi appears on Canale 5: 8.10pm

In the debt markets, the UK will sell £2.5bn of Treasury bills.

7.52am GMT

Cameron postpones speech on Europe

The other big story this morning is David Cameron’s decision to delay his statement on Britain’s future in the European Union after abandoning a trip to the Netherlands to deal with the Algerian hostage crisis.

My colleagues Nicholas Watt and Juliette Jowit report:

Downing Street indicated that the prime minister would deliver his speech, in which he planned to warn that Britain could “drift towards the exit” unless powers are handed back from the EU, once the hostage crisis had ended. The postponement was announced shortly before the prime minister was due to fly to meet the Dutch prime minister, Mark Rutte, before his speech in Amsterdam…

Cameron had been due to warn his fellow European leaders that British membership of the EU could be put at risk unless its membership terms are changed. “If we don’t address these challenges, the danger is that Europe will fail and the British people will drift towards the exit,” Cameron was due to say in the speech to an audience of business leaders in Amsterdam.

“There is a growing frustration that the EU is seen as something that is done to people rather than acting on their behalf. And this is being intensified by the very solutions required to resolve the economic problems.

“People are increasingly frustrated that decisions taken further and further away from them mean their living standards are slashed through enforced austerity or their taxes are used to bail out governments on the other side of the continent.”

Updated at 7.52am GMT

7.45am GMT

Good morning and welcome to our rolling coverage of the eurozone crisis. Greek politicians were busy last night as they discussed whether to investigate four former ministers for their handling of the explosive ‘Lagarde list’ of potential tax evaders.

It was a long night and the parliamentarians finally voted at 2am to investigate former finance minister George Papaconstantinou, who was expelled from the socialist PASOK party after names of three of his relatives were deleted from the list.

In a relief for the government, the politicians voted against a motion to investigate socialist chief Evangelos Venizelos, who is one of three coalition members. Former prime ministers Lucas Papademos, a technocrat, and George Papandreou, a Socialist, also escaped an inquiry.

Christine Lagarde handed the list of about 2,000 Greeks with money stashed in Switzerland to Athens in 2010, when she was French finance minister. But its existence only became publicly known in September last year.

Since then, the scandal has preoccupied Greece, where tax evasion is a major factor in the country’s financial crisis. There is already a huge distrust in politicians, made worse by revelations that the list was misplaced, locked away in a cabinet, copied and tampered with.

We’ll have all the reaction to the vote today, including the latest developments in the eurozone and beyond.

Updated at 8.36am GMT

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