Europe’s liberal illusions shatter as Greek tragedy plays on

Voters across Europe have got the message from the way in which Greece’s opposition to austerity was crushed

Greece is running out of money. The government in Athens is raiding the budgets of the health service and public utilities to pay salaries and pensions. Without fresh financial support it will struggle to make a debt payment due in July.

No, this is not a piece from the summer of 2015 reprinted by mistake. Greece, after a spell out of the limelight, is back. Another summer of threats, brinkmanship and all-night summits looms.

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Devaluation is a dangerous game. But Britain may have to try it

Our balance of payments situation is so poor that a 10% weakening in sterling would be no bad thing – if there were not such a risk of things getting out of hand

Ever since his first written evidence to the Treasury committee, the governor of the Bank of England, Mark Carney, has hinted that he understands the UK’s real deficit problem. This is not the budget deficit, of which chancellor Osborne has made such a fetish, but the balance of payments deficit.

Indeed, that distinguished former permanent secretary to the Treasury and cabinet secretary, Lord Turnbull, recently pointed out that debt owed to citizens of this country is not a problem – and that by not borrowing more for infrastructure at such low rates, Osborne is actually impoverishing future generations. He is, said Turnbull, “playing a dirty game”.

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China’s factories grow less than expected, raising recovery doubts

Economists had expected stronger growth in the manufacturing sector after recent stimulus measures by the Beijing regime

China’s manufacturing sector expanded less than expected in April, raising doubts about the sustainability of a recent pick-up in the world’s second-largest economy.

The official purchasing managers’ index (PMI) was 50.1 in April, easing from March’s 50.2 and barely above the 50-point mark that separates expansion in activity from contraction.

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Eurozone smashes forecasts with 0.6% growth, markets hit by strong yen – as it happened

Europe’s economy has posted its fastest growth in a year, as France and Spain beat expectations, but US data disappoints

The breakdown of the rig figures shows oil rigs falling by 11, gas rigs by 1 and miscellaneous rigs rising by 1 to give the total decline of 11 for the week.

The total is the lowest since November 2009, as oil companies continue to be cautious despite the revival in crude in recent days, with Brent around its highest levels for the year. The Baker Hughes figures showed:

The number of US oil rigs drilling has dropped for the sixth week in a row.

According to data from Baker Hughes, the number of rigs dropped by 11 to 420.

The strength of the yen after the Bank of Japan decided on Thursday to delay any further stimulus measures has helped push stock markets sharply lower on the last trading day of the month. The final scores showed:

Standard and Poor’s has kept its UK credit rating at AAA, but with a negative outlook due to the risks of Britain leaving the European Union in what it expects to be a close referendum vote. It said:

In our opinion, the possibility that the U.K. could leave the European Union (EU) as a consequence of a planned “leave or remain” referendum set for June 23, 2016, represents a significant risk to the U.K. economy, in particular to its large financial services sector and exports.

If the U.K. were to leave the EU, it may make financing its twin deficits more difficult, particularly its large current account deficit, which stood at 5.2% in 2015.

A vote to leave is likely to hurt confidence, investment, and GDP growth, and is likely to have a negative effect on public finances. As a consequence, a U.K. departure from the EU (or “Brexit”) would likely lead us to lower the long-term sovereign credit rating.

We believe that, having left the EU (the destination for about 44% of U.K. goods and services exports), the U.K. would largely lose its capacity to influence the EU’s policies for key sectors, including financial services.

Commodity stocks have been some of the main gainers in the past month. Tony Cross at Trustnet Direct said:

Recapping the month, it’s been the miners that have shone as commodity prices appear to be moving away from the dark days seen at the start of the year and some stability is returning to the market. Anglo American is up 40% on the month, whilst a number of the sector peers have added 15%-20% too. The index may be comprehensively off the highs we touched just 10 days ago, but without the boost from commodity stocks, the picture for April would have looked a whole lot bleaker.

A June rise in US interest rates looks a little unlikely, and not just because of the uncertain US economic data:

Unless the polls show no real chance of #Brexit I just can’t see the Fed hiking eight days before Europe could explode.

Oil prices have flattened out, with Brent crude now up just 0.1% at $48.2 a barrel.

But they are still on track for their biggest monthly gain in seven years, helped by a weaker dollar and signs of a dip in US production. The increase also came despite Opec’s inability to agree a cap on output at January’s levels to tackle the current supply glut.

And here’s a chart of the consumer sentiment index:

The survey’s chief economist Richard Curtin said:

Consumer sentiment continued its slow decline in late April due to weakening expectations for future growth, although their views of current economic conditions remained positive. All of the April decline was in the Expectations component, which fell by 4.8% from one month ago and by 12.6% from a year ago and by 14.7% from its January 2015 peak. The retreat from the 2015 peaks was evident across a wide range of expectations about prospects for the national economy.

The size of the decline, while troublesome, is still far short of indicating an impending recession. The decline is all the more remarkable given that consumers’ assessments of current economic conditions, including their personal finance, have remained largely unchanged at very positive levels during the past year. This divergence may reflect the strength of the consumer relative to the business sectors, and may have been exacerbated by growing uncertainty about the economic policies advocated by various presidential candidates. Overall, the data indicate that inflation-adjusted personal consumption expenditures will grow by 2.5% in 2016.

US consumer confidence is at its weakest since September last year, according to a new survey.

The University of Michigan consumers sentiment index has fallen from 91 in March to 89 in April, below estimates of a level of 90.

More downbeat US data.

The Chicago purchasing management index has come in at 50.4 in April, compared to 53.6 in the previous month and expectations of a level of 53.

This was a disappointing start to the second quarter, with the Barometer barely above the neutral 50 mark in April. Against a backdrop of softer domestic demand and the slowdown abroad, panellists are now more worried about the impact a rate hike might have on business than they were at the same time last year.

US markets have followed other global bourses lower, with the Dow Jones Industrial Average down 46 points or 0.2% in early trading.

Markets remain nervous as the yen hits an 18 month high, on concerns that the Bank of Japan may hold fire on any further stimulus measures after disappointing investors at this week’s meeting.

Opec’s oil output in April rose by 170,000 barrels month on month to 32.64m barrels, according to a Reuters survey.

The rise, bringing the level close to January’s record high, was led by Iran, Iraq and the United Arab Emirates. There were declines reported by Kuwait following a strike, Nigeria and Venezuela with Saudi Arabian output little changed from March.

Traders across Europe have given a resounding shrug to the eurozone’s growth figures.

All the main stock markets are down today, with the FTSE 100 shedding 56 points (0.8%). The French and German markets are both deeper in the red, losing around 1.5%.

Related: RBS reveals £1bn loss and Swiss inquiry into Coutts subsidiary

For tech shares, April has indeed been ‘the cruellest month’, and while the sector as a whole is still up since the February lows, it looks like any further market rally for US shares may well have to contend without support from these high-growth names.

Swiss bank UBS has upgraded its forecast for eurozone growth this year.

It now expects the region to expand by 1.6% in 2016, up from 1.4%, following the news that growth has doubled to 0.6%.

While temporary factors, including weather, may partly explain this outcome, today’s reading nevertheless comes as a rather positive surprise when considering the difficult external environment at the beginning of the year.

Today’s GDP report contains less detail than usual, as Eurostat have produced it within 30 days of the quarter’s end, not the usual 45 days.

Tomas Holinka, economist at Moody’s Analytics, reckons the growth rate could prove to be too optimistic, once more data comes in:

“The euro zone economy was at a better shape at the beginning of this year than expected. The quarterly growth accelerated to 0.6% in the three months to March, from 0.3% in the previous quarter.

Although this preliminary number might be revised down in coming months, the growth definitely surprised on the upside. Yet weakening U.S. and emerging market economies, the influx of migrants, and a possible U.K. exit from the EU are key risks to the region’s economy.”

Bert Colijn, economist at ING, says he’s “astonished” that eurozone growth has doubled to 0.6%:

The first months of the year were tumultuous with large stock market declines, growth concerns in the US, China and many emerging markets and plummeting confidence among businesses and consumers. Clearly, businesses and consumers have not acted on their gut feelings.

While the US and UK are suffering from a strong dollar and a possible Brexit, the Eurozone saw a marked acceleration.

This jump in eurozone growth comes at a good time, given worries over Brexit, political uncertainty in Spain, and the renewed tensions in Greece.

But Alasdair Cavalla of the Centre for Economics and Business Research urges caution:

This is the fastest rate of output growth since Q1 2015 for the Eurozone and its timing is propitious given the numerous sources of anxiety for the continent.

However, false dawns have been common since the financial crisis and nowhere more so than in Europe. Country-level figures revealed the French economy is finally getting into gear, showing a 0.5% rise.

It’s taken the eurozone a long, long time to reach its pre-crisis levels again.

As this chart shows, its post-Lehman recovery was knocked off course in 2011 by the debt crisis:

OFFICIAL: Euro-area GDP has finally recovered pre-crisis levels! Gap now closed, 3 years after UK, 6 years after US.

Despite this stronger growth, the eurozone has fallen back into negative inflation.

Prices across the single currency bloc fell by 0.2% this month, Eurostat reports, having been flat in March.

So: unemployment is falling, the economy is growing MUCH better than expected BUT no inflation in sight. It just gets easier for the #ECB

In another boost, unemployment across the euro area has hit a new four and a half-year low.

The eurozone unemployment rate dropped to 10.2% in March, down from 10.4% in February, and the lowest recorded since August 2011.

Among the Member States, the lowest unemployment rates in March 2016 were recorded in the Czech Republic (4.1%) and Germany (4.2%). The highest unemployment rates were observed in Greece (24.4% in January 2016) and Spain (20.4%).

The eurozone has finally recovered all the economic output lost when the collapse of Lehman Brothers triggered the biggest financial crisis in generations.

But it’s been a bumpy ride, and Spain and Italy have yet to reach this milestone:

Euro area GDP above pre-crisis levels (Q1 2008) for the first time.

This is the strongest eurozone growth rate in a year.

The wider EU expanded by 0.5% during the last quarter.

The eurozone grew by 0.6% in the first three months of 2016.

That’s twice as strong as in the previous three months, and much stronger than expect.

Euro area GDP +0.6% in Q1 2016, +1.6% compared with Q1 2015 #Eurostat

BOOM euro area GDP up by 0.6% QoQ in Q1. Germany probably stronger-than-expected too.

Advertising giant WPP has thrown more fuel on the fire of excessive pay, by handing its boss, Sir Martin Sorrell, a pay packet of almost £71m.

More encouraging news: Italy’s unemployment rate has hit its lowest rate in over three years.

Figures just released show that the Italian jobless rate dipped to 11.4% in March, from 11.6% percent in February.

#Italy jobless rate falls to lowest since 2012 on recovery pace via @ltotaro

Philippe Waechter, chief economist at Natixis Asset Management, also believes the rise in French growth will help Francois Hollande:

Waechter says (via the FT):

“There is a stronger situation in the labour market and that will create strong momentum this year…

It’s perfect timing for Hollande.”

The acceleration in French growth to 0.5% is good news for Francois Hollande, the embattled president.

“This is solid growth.

Output is increasing and translating into more jobs and a drop in unemployment.”

Shares in airlines group IAG have dropped by over 4% this morning after it warned that March’s Brussels terror attacks have hit sales.

We have been expecting Q1 2016 #Eurozone #GDP growth of 0.4% q/q, but now wonder if it could beat this. #Germany likely saw decent growth

The eurozone may have grown faster than expected in the last quarter.

Economists had forecast growth of 0.4%. But with France and Spain both beating expectations (and Germany not reporting GDP yet), we might get a higher number in 90 minutes time….

#French (+0.5%qq) and #Spanish (+0.8%) Q1 GDP figs point to upside risks to consensus forecast of +0.4% for #euro-zone fig at 10am BST.

Spain has racked up another quarter of strong economic growth, despite the political turmoil that has gripped the country this year.

Spanish GDP rose by 0.8% in the first quarter of 2016, matching the previous three months. Its economy has now been growing for almost three years:

#Spain #GDP Growth Rate QoQ Flash at 0.8%

Breaking: Austria’s economy grew by 0.4% in the first three months of this year.

#Austria #GDP Growth Rate QoQ Flash at 0.4%

The oil price has just hit its highest level of the year.

Brent crude is now trading at $48.30 per barrel, up 0.3% this morning.

European stock markets are expected to fall this morning, despite France’s better-than-expected growth figures.

Investors are jittery following a late selloff on Wall Street last night (the Dow Jones fell 1%).

Lack-lustre performances in New York & Asia may take European stocks lower at the opening – FTSE -43, DAX -82, CAC -38 courtesy of IG 5.20am

Disappointingly, Germany isn’t reporting its growth figures this morning.

Early Easter depressed German retail sales, but growth is slowing, and likely will continue to do so in Q2.

More reaction to France’s growth figures:

Good news for the economy of France as GDP rises by 0.5% in the first quarter #Euro #ECB

FRANCE: Good Q1 GDP performance (+0.5%) mainly due to catch-up in household consumption after Paris attacks. Investment rebound confirmed.

This chart confirms that domestic spending (in red) drove the French economy forwards in the last quarter:

Fred Ducrozet of private Swiss-bank Pictet agrees that the French growth figures are encouraging:

French Q1 GDP puts carryover for 2016 at 1.0%. Government target (1.5%) easily on track. Good news continue following unemployment drop.

We won’t get details from other flash GDP reports but France a case in point: € domestic momentum has legs.

France’s strong performance means the eurozone may economy finally have recovered all the damage caused in the financial crisis.

Euro-area just needs a 0.18% QoQ growth in Q1 for GDP to FINALLY recover pre-crisis levels. Verdict this morning. BBG consensus has +0.4%.

The French economy has smashed expectations, by growing by 0.5% in the last quarter.

That’s the best quarterly growth rate in a year, up from just 0.3% in October-December.

#France #GDP Growth Rate QoQ 1st Est at 0.5%

Good morning.

We’re about to get a major healthcheck on the European economy.

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Eurozone economy grows faster than expected in first quarter

Currency bloc beats forecasts but inflation slips back into negative and experts urge against reading too much into data

The eurozone economy grew faster than expected in the first three months of 2016, but inflation in the single currency bloc has fallen back into negative territory, putting more pressure on the European Central Bank to keep deflation at bay.

Official statistics showed GDP in the 19-nation eurozone rose 0.6% in the first quarter despite a backdrop of turmoil on global markets at the start of the year. It was the fastest growth for a year and twice the pace recorded in the closing quarter of 2015. GDP was up 1.6% on a year earlier.

Lowest unemployment rate in euro area since Aug 2011, in EU since April 2009 #Eurostat

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Consumer confidence in UK at lowest level in 15 months, survey suggests

Uncertainty over EU referendum and ongoing political and financial turmoil in eurozone ‘casting a cloud over economy’

Worries about the EU referendum in June and over a resurgence of the eurozone crisis have knocked consumer confidence in the UK to its lowest level in more than a year, according to a report.

Market research firm GfK said its consumer sentiment indicator for April was the weakest for 15 months as households became gloomier about the UK’s economic outlook. The index dropped to -3 from a March reading of 0, when GfK also claimed referendum jitters had hit consumer confidence.

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Obama did avert financial catastrophe. But his economic legacy is mediocre | Michael Paarlberg

Telling us ‘it could have been worse’ is not a very compelling legacy

It’s hardly surprising for an outgoing president to be preoccupied with his legacy, or to gripe about low approval ratings. It’s more surprising for a president to blame them on his lack of communication skills, especially when that president is Obama.

Obama has been on a legacy-building press tour lately, most recently talking up his economic record in an interview with the New York Times. His main regret, reminiscent of the classic job interview cop-out “my biggest flaw is that I’m just too hard of a worker!” is that he failed to tell voters what a great job he did in managing the recovery: “If we had been able to more effectively communicate all the steps we had taken to the swing voter, then we might have maintained a majority in the House or the Senate”.

Related: US economy grows at slowest pace in two years as Obama defends legacy

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BHS debacle shows the true costs of corporate greed | Letters

Prem Sikka (Opinion, 26 April) is right that BHS is a victim, but not of shareholder greed – rather director greed and flawed legislation. In the early 1980s most corporate pension funds had sizeable surpluses. As an accountant at the time, I argued that pension funds should be ringfenced, but I lost the argument on the grounds that companies had a liability to pay their defined pensions. So companies took “holidays” and in some cases raided the pension pot, and we all know what happened.

But it is getting worse; corporate greed is becoming out of control. For example, BP has awarded its CEO a huge amount despite incurring huge losses. Then to get shareholders off the scent it maintained the dividend (this strategy didn’t work), but had to borrow more money to pay it.

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