While the eurozone is looking healthy, inflation remains subdued – and warning signs remain over the global economy
There was little in Mario Draghi’s comments in Germany on Wednesday to indicate that the European Central Bank plans to stop pumping cheap money in to the eurozone anytime soon.
Some expected him to use the platform of a speech to a gathering of Nobel economics laureates and students to say that a long period of growth across the 19-member currency bloc warranted a reduction in the ECB’s quantitative easing stimulus programme.
As Andy Burnham, the Greater Manchester mayor, convenes a northern council in Leeds, Theresa May heads to Teesside. It looks as if the battle for northern England has begun
Theresa May sped to Teesside on Wednesday afternoon to launch the South Tees Development Corporation, a 25-year regeneration project backed by Ben Houchen, the new Conservative mayor of Tees Valley. It cannot have been coincidence that hours earlier in Leeds there was a gathering of an embryonic northern council of regional politicians and business interests, angered by the government downgrade of the electrification of the Leeds-Manchester line announced last month. Called the northern transport summit, in fact its ambitions were much wider: to coordinate and amplify a regional identity. As Andy Burnham, Greater Manchester’s mayor, said earlier this week, unless the north finds its political voice, “we will be waiting for ever for a powerhouse”.
What had turbocharged the sense of grievance over the delay to the trans-Pennine electrification, and to other out-of-London rail improvements, was the confirmation that came only days later of government backing for Crossrail 2, the £31bn north-south London rail route. Transport for London had been in a standoff over who would pay, with the transport secretary, Chris Grayling, whose disastrous cost-cutting when he was justice secretary has now largely been reversed. The tension over the London-centric investment of scarce infrastructure spending was worsened by the publication of the thinktank IPPR North’s now annual estimate of relative funding between the south-east and the north, which showed that parity funding over the past 10 years would have meant £59bn more in investment for the north. The government angrily disputed the figures, as it does every year, claiming that the IPPR does not take into account infrastructure investment in one region that benefits a much wider area, like the improvements to the A14 linking the Midlands to the East Anglian port of Felixstowe. The IPPR points out that it assigns regional spending according to official Treasury figures.
Ian Sinclair takes issue with the idea that the 2001 invasion was legal. Plus Dr Richard Lawson suggests that the west buy Afghan farmers’ opium crop, medicalise it, and use it medicinally in Africa
Was the 2001 US-led invasion and subsequent ongoing occupation of Afghanistan “never an illegal war”, as the Guardian asserts (Editorial, 23 August)?
Written in 2010, the official House of Commons Library briefing paper on the subject makes interesting reading: “The military campaign in Afghanistan was not specifically mandated by the UN, but was widely (although not universally) perceived to be a legitimate form of self-defence under the UN charter.”
The latest monthly Guardian analysis finds better news after a volatile start to the year, but potential hazards in the EU exit talks
Ministers are preparing for crucial Brexit talks this autumn against a backdrop of better news on jobs, inflation and the public finances as the UK economy displays signs of stability after a volatile start to the year, a Guardian analysis shows.
The Guardian’s monthly tracker of economic news shows inflation coming close to its peak and the lowest levels of unemployment since the mid-1970s. However, the ever-present threat that rocky negotiations could knock business confidence, derailing the economy, remains.
More on Draghi, with Konstantinos Anthis at ADS Securities suggesting the ECB president may not be able to avoid giving some hints as to the bank’s thinking on the future of its economic stimulus package:
The stakes are high for Mario Draghi during the Jackson Hole Symposium as he is expected to avoid talking about tapering at this point in an attempt to soften the euro but it will be virtually impossible for him to successfully sidestep any questions regarding the matter. A good precursor of what the ECB President will talk about will be his speech in Lindau, Germany today and if he hints on a bearish bias ahead of the weekend meeting in Wyoming then the Euro will drive towards 1.1700.
The speech from ECB boss Mario Draghi may indeed be a damp squib, reckon analysts at RBC Capital Markets:
This morning, ECB Mario Draghi is scheduled to speak at an event in Lindau, Germany. The ECB’s website has the Draghi address beginning at 8:25 BST with the text of the address published on the ECB website. As we have argued before when it comes to his Jackson Hole appearance later this week (Friday), we doubt that the ECB president will have anything substantially new to say ahead of the crucial ECB meeting on 7 September. He is more likely to repeat the mantra of patience, persistence and prudence rolled out at the ECB’s equivalent of Jackson Hole in Sintra, Portugal, earlier this summer.
Here are the opening calls for Europe from IG:
Our European opening calls:$FTSE 7370 down 12 $DAX 12234 up 5 $CAC 5130 down 2$IBEX 10417 up 8$MIB 21711 down 19
Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business.
We get the latest healthcheck of the eurozone economy today, with provisional August manufacturing and services numbers for France and Germany, as well as the bloc as a whole.
After a strong few months [Germany does] appear to be starting to show signs of plateauing. Expectations are for a modest decline from 58.1 to 57.7 in manufacturing, while services, which have been underperforming expected to pick up from 53.1 to 53.4.
The numbers from France are also expected to decline modestly with manufacturing slipping back to 54.5 from 54.9 and services to come in at 55.9, down from 56.0.
It was only a month ago that the head of the German IFO reported that business confidence had hit record highs in Europe’s largest economy with sentiment amongst German businesses at euphoric levels. This in itself should have acted as a warning sign given that euphoria as an emotion tends to dissipate quite quickly and subsequently be followed by either melancholy or depression.
This appears to be what German investors are experiencing if yesterday’s ZEW economic expectations is any guide, after it hit its lowest level this year, and a 10 month low.