EU cuts UK growth forecast as eurozone motors ahead

Brussels’ health check of member states sharply cuts UK forecast to 1.5% as eurozone enjoys best year since financial crisis of 2007

The European commission enters key Brexit talks with the government with the eurozone economy in its best shape for a decade and activity in the UK weaker than expected six months ago.

In its half-yearly health check, the commission sharply cut its forecast for UK growth this year and said it was likely to continue struggling in 2018 and 2019 even on the assumption that trade would not be disrupted by its departure from the EU.

Related: EC slashes UK growth forecasts but sees best eurozone growth in a decade – business live

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Gordon Brown memoirs: Barclays’ RBS bid in 2008 is a staggering revelation

Barclays’ appetite for blind risk and greed in the midst of financial crisis is an intriguing tale – somebody should now spill all the beans

Gordon Brown is not alone in thinking errant British bankers got off lightly in the 2008 financial crisis. We should also be worried that the former prime minister thinks the new criminal offence of reckless misconduct that causes a financial institution to fail, which was introduced after the crisis to address the perceived legislative weaknesses, may not be up to the job.

Related: Gordon Brown: Bankers should have been jailed for role in financial crisis

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Gordon Brown: Bankers should have been jailed for role in financial crisis

Ex-PM warns failure to take tougher stand has made it inevitable that rogue bankers will again gamble with public money

Gordon Brown has claimed bankers should have been jailed for their fraudulent and dishonest behaviour during the financial crisis that led to Britain’s deepest post-war recession and his defeat in the 2010 general election.

The Labour former prime minister used the second extract from his memoirs to warn that the failure to take a tougher line with wrongdoing – as pursued by other countries – has made it inevitable that rogue bankers will again gamble with public money.

Related: Gordon Brown memoirs: Barclays’ RBS bid in 2008 is a staggering revelation

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Is the growth in living standards worse now than in the Great Depression?

New data suggests life is getting tougher now for working-age adults than in the lost decade of the 1930s

The 1930s are the benchmark when it comes to lost decades. There are recessions and deep recessions, but then there is the Great Depression. In terms of sustained misery, nothing remotely comes close to the 10-year period that followed the Wall Street Crash of 1929.

Yet in one respect – growth in living standards – the performance of the UK since the financial crisis began in 2007 has been worse than it was in the era that included coming off the Gold Standard, the formation of the National Government and the Jarrow March.

Gross domestic product (GDP) is a key government statistic and provides a measure of the UK’s total economic activity.

Related: A weak pound is no tonic for UK’s long-term economic recovery

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Lloyds was not bullied into buying HBOS, high court hears

Former directors reject claim by bank shareholders that Gordon Brown’s government pushed bank into buying HBOS to avoid nationalisation

Lloyds Bank and five of its former directors “emphatically reject” allegations they were bullied into taking over HBOS, their QC has told the high court.

Helen Davies was responding to claims made by 6,000 Lloyds shareholders, who have brought a £600m compensation claim that they were not given a true picture of the financial health of HBOS when they voted through the takeover in November 2008.

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World markets climb, oil jumps on Iraq tensions – business live

European markets move higher but Spain lags on Catalonia independence uncertainty, Chinese inflation jumps and oil climbs on new supply concerns

Over to Spain, and the Madrid government believes the Catalan letter on possible independence is not sufficient, according to El Mundo:

Spanish Justice Minister says that Puigdemont’s letter is not a valid answer https://t.co/xPEotK16d5

Because it’s not clear enough & because Rajoy asked for a list of measures that must be taken to restore the constitutional framework

Back with the rise in oil prices, and despite the tensions surround Iraq and Iran, crude may not go much higher, reckons Neil Wilson, senior market analyst at ETX Capital:

Oil prices pushed higher as the conflict between Iraq and Kurdistan entered a new phase with the advance of Iraqi forces on Kirkuk. However any disruption may prove temporary with neither side wanting to shut-in oil production for long. The prospect of fresh US sanctions on Iran may offer longer-term support to prices, although again any sanction regime will be limited in scope given that the US position is at odds with the rest of the international community.

Brent rose above $58 and while the late September highs above $59 are within sight it may struggle to find much momentum past $60 as this remains a fairly localised conflict that is unlikely to spark wider disruption to supplies from the Middle East.

The old pound coin may no longer be wanted by most people now it is not legal tender, but sterling itself is in demand.

It has climbed 0.11% against the dollar to around $1.33 and 0.38% against the euro to €1.1280, after a bit of positive news on the Brexit front. Connor Campbell, financial analyst at Spreadex, said:

It may be relatively quite on the economic data front today but there are some key events to come, not least UK inflation on Tuesday. Richard Partington has been looking at the prospects:

UK inflation is expected to hit a five-year high this week, outstripping growth in pay packets and putting renewed pressure on the Bank of England to raise interest rates.

City economists forecast that the consumer price index (CPI) will be shown to have risen to 3% in September, up from 2.9% a month earlier, its highest level since 2012.

Related: UK inflation set to hit five-year high, raising heat on interest rates

Here’s a link to the Catalan letter to Rajoy:

As expected, Puigdemont’s reply was not “yes or not”, but a 4 pages letter to Rajoy https://t.co/PW5lglnboO

The dip in the Spanish market follows a letter from Catalonia’s President Carles Puigdemont to Madrid, which appears not to be the clear yes or no decision on the region’s independence which Spanish Prime Minister Mariano Rajoy had asked for.

Bloomberg has the story here.

As expected European markets are on the rise again, although Spain’s Ibex is proving an exception on the continuing uncertainty over Catalonia’s possible move towards independence.

The FTSE 100 is up 0.16%, helped by a positive start for mining shares after the Chinese inflation data.

In the UK, the old pound coin ceased to be legal tender at midnight.

But some retailers will continue to accept the coin for a limited period, while not everyone is prepared for the new 12-sided replacement.

Related: New quid’s in, but not everyone is ready to accept the 12-sided coin

Ahead of Chinese third quarter GDP figures and the forthcoming Communist Party congress, the country’s inflation numbers have just been released.

The headline year on year figure for September came in at 1.6%, in line with expectations and down on the August reading of 1.8%.

With central bankers the world over scratching their heads as to how long inflationary pressures are likely to remain benign they may well be starting to see the end of this benign environment if this morning’s latest inflation data from China is anything to go by….Could this increase [in factory gate prices] be any early indicator of global inflation starting to show signs of returning?

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

The weather may be marking the anniversary of the 1987 storms which hit the UK with ex-hurricane Ophelia causing shutdowns in Ireland. But the stock market storms which accompanied the bad weather thirty years ago are far from investors’ minds. Quite the reverse, with the MSCI All Country World share index hitting a new peak of 495.37. With the Dow Jones Industrial Average at another record high on Friday and the Nikkei 225 up nearly 0.5% for its tenth day of rises, European markets are expected to open higher.

Our European opening calls:$FTSE 7554 +0.25%
$DAX 13013 +0.17%
$CAC 5364 +0.22%$IBEX 10279 +0.20%$MIB 22409 -0.02%

Last week saw new record closes for the MSCI World index, FTSE100, FTSE250, German DAX as well as the major US markets, while the Nikkei225 enjoyed its highest levels since 1996, as investors continue to adopt an optimistic outlook for the global economy, putting aside concerns about geopolitics in their hunt for returns.

While all the talk is of a possible easing back from the current easy monetary policy stance the fact remains that even with a moderate retreat from the US Federal Reserve, the European Central Bank and the Bank of England the fact remains that interest rates will still be nailed to the floor on a historical basis.

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Lloyds shareholders’ court case over HBOS takeover set to begin

High court may ask five former Lloyds directors to explain circumstances of rescue at height of financial crisis

A £600m case is due to begin in the high court this week which is expected to lead to five former directors of Lloyds Banking Group being asked to explain the circumstances that led to the rescue of HBOS during the height of the financial crisis.

The bank’s former chair Sir Victor Blank and former chief executive Eric Daniels are among those named in the case brought by Lloyds shareholders who argue they would not have voted through the takeover of HBOS if they had been given the true picture of its financial health.

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Won’t get fooled again: IMF warning shows it’s learned from past errors | Larry Elliott

Fund failed to foresee 2007 financial crisis, but this time around, it is determined not to miss signs of trouble in global economy

The International Monetary Fund’s World Economic Outlook (WEO) runs to almost 300 pages, but it could be summed up by the title of the song with which the Who always brought their gigs to an end: Won’t Get Fooled Again.

In 2007, the IMF ended up with its reputation severely tarnished after failing to notice that the global economy was about to suffer its biggest recession since the 1930s Great Depression.

Related: Global economic recovery may not last, warns IMF

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