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Greek crisis: eurozone ministers seek deal on bailout and debt relief - business live Bank of England governor denies being politically biased over Brexit - live updates
(35 minutes later)
10.58am BST
10:58
Committee chairman Andrew Tyrie steps in -- perhaps worried that Mark Carney and Jacob Rees-Mogg might take their argument outside.
He tells the BoE governor that many members of the commitee would have been concerned if the Bank had NOT discussed the EU referendum.
Labour Rachel Reeves than puts the boot into Rees-Mogg, saying:
If anyone’s reputation has been damaged by today’s performance, it’s not the Bank of England.
Carney be like pic.twitter.com/Oft0ElUXbL
Carney 3 Rees-Mogg 0
10.50am BST
10:50
Carney accused of 'political involvement' over Brexit.
Jacob Rees-Mogg MP now accuses Carney of being influenced by chancellor George Osborne.
As the gloves come off, Carney insists that he’s not being played by government.
There’s “no possibility of undue influence from the Treasury”, Carney insists. It wouldn’t work anyway, even if they tried
Rees-Mogg repeatedly trying to establish HMT influence over the Bank of England. "There is no possibility of undue influence", says Carney.
Q: So it’s terribly convenient that you’re taking exactly the same position as the Treasury?
I don’t accept that at all.
Q: But you have a duty to remain apolitical. How can anyone trust you on interest rates now?
Our comments might not please you, Carney shoots back, but it has improved the chances of the economy recovering from the Brexit undertainty.
To suggest otherwise is to try to undermine it.
Rees Mogg insists that Carney has become politically involved...
I don’t think it’s worth replying to, says Carney, trying to swat the pro-Brexit MP aside.
Rees-Mogg leaves Carney speechless after accusing him of getting "politically involved". "I don't think that's worth replying to" #euref
10.44am BST
10:44
Q: What contact have you had with George Osborne about the referendum?
Mark Carney says he has had a series of conversations around how membership of the EU allows the bank to achieve its monetary targets.
Ultimately we can achieve the inflation target whether we’re in the EU or not.
And there have also been conversations about the impact of Brexit on financial stability, and on the mechanics of potentially exiting the EU, Carney says.
Q: How would any directions from the government come?
I’d expect it in writing, and in public, Carney says - he wouldn’t accept ‘informal direction’.
10.39am BST
10:39
Mark Carney warns that sterling has been hit since November by the single issue of whether Britain stays in the EU, or leaves.
That’s why the Bank was right to flag up that the referendum could change monetary policy, he argues.
Rees-Mogg isn’t impressed: pointing out that a Labour government in his lifetime proposed re-introducing capital controls. Yet the Bank wouldn’t give a view on a general election - but here it is, wading into the referendum issue.
Your comparison is essentially false, he tells Carney.
10.35am BST
10:35
Now Jacob Rees-Mogg MP, a pro-Brexit MP, takes the microphone.
Q: In general elections, you don’t give a view on opposition policies, so why is the Bank giving its view on Brexit?
Carney explains that the EU referendum is a single event that creates a ‘discrete risk’ to monetary policy, while a general election does not, as policies are implemented over time.
Q: But a change of government is a discrete event, Rees-Mogg gently insists. You get a new economic policy and a new chancellor.
Carney argue that it’s still not a single event whose impact can be clearly identified.
10.23am BST10.23am BST
10:2310:23
Carney in Treasury committee: no member of the MPC or FPC disagrees with their collective assessment of likely Brexit impact - 20 peopleCarney in Treasury committee: no member of the MPC or FPC disagrees with their collective assessment of likely Brexit impact - 20 people
10.22am BST10.22am BST
10:2210:22
Bank of England united over Brexit recession fearsBank of England united over Brexit recession fears
The Treasury committee now turns to other top officials from the Bank of England.The Treasury committee now turns to other top officials from the Bank of England.
First Martin Weale, who sits on the monetary policy committee which sets interest rates. He says Brexit would probably have a materially negative impact on growth and inflation, in the short term.First Martin Weale, who sits on the monetary policy committee which sets interest rates. He says Brexit would probably have a materially negative impact on growth and inflation, in the short term.
And that would increase the risk of recession, Weale adds.And that would increase the risk of recession, Weale adds.
Dr Gertjan Vleighe, another independent MPC member agrees.Dr Gertjan Vleighe, another independent MPC member agrees.
It is likely that there would be a material slowing in growth, inflation would rise, the exchange rate would fall, if Britain votes to leave the EU, Vleighe explains.It is likely that there would be a material slowing in growth, inflation would rise, the exchange rate would fall, if Britain votes to leave the EU, Vleighe explains.
Ben Broadband, deputy governor, says he agrees too.Ben Broadband, deputy governor, says he agrees too.
Q: So is there anyone on the MPC who disagrees?Q: So is there anyone on the MPC who disagrees?
Governor Mark Carney says there isn’t - the Committee is united on this one.Governor Mark Carney says there isn’t - the Committee is united on this one.
Q: How about the Financial Policy Committee? (responsible for financial stability).Q: How about the Financial Policy Committee? (responsible for financial stability).
Carney says they are also concerned about the referendum:Carney says they are also concerned about the referendum:
It is the consensus view of the FPC that Brexit represents the biggest domestic risk to financial stability.It is the consensus view of the FPC that Brexit represents the biggest domestic risk to financial stability.
Q: And there are no dissenters on the FPC either?Q: And there are no dissenters on the FPC either?
No, Carney replies.No, Carney replies.
UpdatedUpdated
at 10.23am BSTat 10.23am BST
10.16am BST10.16am BST
10:1610:16
The key points so far:The key points so far:
Tyrie: Do you think it's a good idea for the IMF to come over week before the #EURef & jump in with both feet? Carney: I think it's a detailTyrie: Do you think it's a good idea for the IMF to come over week before the #EURef & jump in with both feet? Carney: I think it's a detail
To MPs Carney won't rule out further interventions in Brexit debate, but says the broad issues have been set outTo MPs Carney won't rule out further interventions in Brexit debate, but says the broad issues have been set out
10.15am BST10.15am BST
10:1510:15
Next question for Mr Carney....Next question for Mr Carney....
Q: Is it acceptable for the International Monetary Fund to turn up a week before the EU referendum and give its views? [explainer: the Fund is due to publish its full health check on the UK, including in-depth calculations on the ‘Brexit’ effect, next month]Q: Is it acceptable for the International Monetary Fund to turn up a week before the EU referendum and give its views? [explainer: the Fund is due to publish its full health check on the UK, including in-depth calculations on the ‘Brexit’ effect, next month]
Quite frankly, I have no influence over the IMF, says Carney.Quite frankly, I have no influence over the IMF, says Carney.
Q: But is it acceptable?Q: But is it acceptable?
The thrust of the IMF’s views on this issues is well known, Carney arguesThe thrust of the IMF’s views on this issues is well known, Carney argues
Q: But is it a good idea for the IMF to ‘jump in’ with both feet, at such a crucial political time?Q: But is it a good idea for the IMF to ‘jump in’ with both feet, at such a crucial political time?
Carney says he’s only expecting to get “detail” from the IMF about the UK economy next month....Carney says he’s only expecting to get “detail” from the IMF about the UK economy next month....
10.11am BST10.11am BST
10:1110:11
Carney defends Bank's Brexit warningCarney defends Bank's Brexit warning
Mark Carney begins his hearing by defending the Bank of England’s warning that Britain could plunge into recession if it leaves the EU.Mark Carney begins his hearing by defending the Bank of England’s warning that Britain could plunge into recession if it leaves the EU.
Asked what principles and guidelines are being used for such forecasts, the governor says the Bank has adopted “substantially the same rules as the UK civil service”.Asked what principles and guidelines are being used for such forecasts, the governor says the Bank has adopted “substantially the same rules as the UK civil service”.
But there’s one big difference - civil servants support a minister, while the Bank is independent and doesn’t support government policy.But there’s one big difference - civil servants support a minister, while the Bank is independent and doesn’t support government policy.
And the Bank will soon go into purdah, to prevent any officials saying anything controversial in the run-up to the June 23 referendum.And the Bank will soon go into purdah, to prevent any officials saying anything controversial in the run-up to the June 23 referendum.
However, the Bank will be setting UK interest rates on 16 June, and will release the minutes of its meeting on that dayHowever, the Bank will be setting UK interest rates on 16 June, and will release the minutes of its meeting on that day
Q: So we can’t exclude the possibility of anoher intervention in the Brexit debate, asks chairman Andrew Tyrie....Q: So we can’t exclude the possibility of anoher intervention in the Brexit debate, asks chairman Andrew Tyrie....
It can’t be excluded, Carney agrees. But in his judgement, the Bank has already highlighted the main issues. So he doesn’t expect to say anything new on the 16th.It can’t be excluded, Carney agrees. But in his judgement, the Bank has already highlighted the main issues. So he doesn’t expect to say anything new on the 16th.
There is a lot of uncertainty in the economy at the moment, so the Bank could be over-or-under-estimating the strength of the economy, Carney concludes.There is a lot of uncertainty in the economy at the moment, so the Bank could be over-or-under-estimating the strength of the economy, Carney concludes.
10.02am BST10.02am BST
10:0210:02
Bank of England governor Mark Carney is appearing before parliament’s Treasury committee to answer questions about the UK economy, and his warnings against Brexit.Bank of England governor Mark Carney is appearing before parliament’s Treasury committee to answer questions about the UK economy, and his warnings against Brexit.
Here’s a livefeed.Here’s a livefeed.
10.01am BST10.01am BST
10:0110:01
Britain’s failure to hit its borrowing targets last year are a blow to chancellor George Osboene, as he tries to rally the country to remain in the EU.Britain’s failure to hit its borrowing targets last year are a blow to chancellor George Osboene, as he tries to rally the country to remain in the EU.
Howard Archer of IHS Global Insight says:Howard Archer of IHS Global Insight says:
The upwardly revised shortfall for 2015/16 leaves the Chancellor open to criticism that he clearly missed the 2015/16 public finances targets that were set out as recently as March’s budget – and could well be used by supporters of the UK leaving the EU as evidence that the Treasury’s forecasts are unreliable (although the public finance forecasts are actually done by the Office for Budget Responsibility).The upwardly revised shortfall for 2015/16 leaves the Chancellor open to criticism that he clearly missed the 2015/16 public finances targets that were set out as recently as March’s budget – and could well be used by supporters of the UK leaving the EU as evidence that the Treasury’s forecasts are unreliable (although the public finance forecasts are actually done by the Office for Budget Responsibility).
9.45am BST
09:45
UK misses borrowing target by £4bn
Breaking: Britain missed its borrowing target last year by more than previously expected.
The UK borrowed almost £76bn in the 2015-16 financial year to cover the deficit, according to new figures just released by the Office for National Statistics.
That’s almost £4bn more than the £72bn estimate set by the independent Office for Budget Responsibility. It’s also £2bn more than the ONS initially estimated last month.
On the upside, it’s £15.7bn less than Britain had to borrow in the previous 12 months -- but still a long way from George Osborne’s target of a surplus.
*U.K. 2015-16 BUDGET DEFICIT GBP76B, REVISED FROM GBP74B
UK ONS: Public sector net debt at the end of April 2016 was £1,596.0 billion, equivalent to 83.3% of gross domestic product (GDP)
The ONS also reports that the UK borrowed £7.2bn in April (the first month of the new financial year).
That’s £0.3bn lower than in April 2015, and the lowest for any April since 2008. But it’s also more than expected, with corporation tax receipts weaker than expected.
Updated
at 9.57am BST
9.27am BST
09:27
Sterling rallies after latest Brexit poll
The pound has jumped this morning, after a new opinion poll gave the Remain campaign a big lead.
Sterling has gained half a cent against the US dollar, to $1.4538. This comes after the Daily Telegraph reported that the campaign to stay in Europe holds a 13-point lead over the Brexit camp.
And crucially, the poll showed more support for Remain from older voters and Conservative supporters (there is some overlap, of course...).
Cue a monstrous jump in the pound....
Nessie formation, sterling. Bullish. https://t.co/zg7C4Ci8RO pic.twitter.com/uc41J8dQUE
9.16am BST
09:16
Elsewhere in the eurozone, Germany’s largest bank has just had its credit rating slashed.
Deutsche Bank has been downgraded by one notch by Moody’s to Baa2, which is just two notches above Junk.
Moody’s warned that Deutche’s recent performance has been weak, after seeing profits halve in the last quarter. And it also faces “substantial operating headwinds”, including the record low interest rates in the eurozone, and uncertainty over the global economy.
CEO John Cryan, who has been pushing a turnaround plan and cutting bonuses, says he’s ‘very disappointed’ by the news.
*CRYAN SAYS `VERY DISAPPOINTED' IN MOODY'S DOWNGRADE (deutsche bank ceo)
8.51am BST
08:51
Greek bond prices hit six-month high
In an encouraging sign for Athens, the yield on Greek debt has hit the lowest level since last November.
Investors are buying into Greece’s government bonds, in the hope that the country is less likely to default on its bonds. That shows they are expecting Greece to receive its much needed €11bn of bailout funds from the eurogroup today.
This has driven down the yield on 10-year Greek debt down to 7.35%, from 7.37% yesterday. A small move, but in the right direction.
Yields move inversely to bond prices, and this chart shows how they soared last summer as Greece flirted with crashing out of the eurozone.
8.45am BST
08:45
The FT’s Mehreen Kahn explains why this eurogroup meeting is a little different:
Healing the Great Schism between lenders - cameo on the Brussels Briefing before #eurogroup https://t.co/HXh3AarfEc pic.twitter.com/DNHbUVVHJ5
She’s also produced this graph, showing why the IMF is demanding deeper Greek debt relief (as explained earlier).
8.35am BST
08:35
Markets dip ahead of eurogroup meeting
European stock markets have opened in the red, as investors watch to see how today’s eurogroup meeting proceeds.
Germany’s DAX led the declines, down 0.5% .
The City is watching to see whether Greece receives funds to help it cover this summer’s debt repayments, and for clashes between the eurozone and the International Monetary Fund.
Conner Campbell of SpreadEx explains:
Whilst it seems almost guaranteed that Greece will receive this monetary boost, things aren’t so cut and dry. The IMF is reportedly refusing to participate in this latest bailout without Greece being granted ‘upfront and unconditional’ debt relief. The issue continues to be the one major division over the treatment of Greece, and could cause a few heated debates among the Eurozone’s finance ministers as they try and bridge the schism between those fiercely opposed to the idea and those willing to cut the country some debt-slack.
8.32am BST
08:32
A surge in investment helped Germany’s economy to grow at the fastest pace in two years.
The Federal Statistics Office in Wiesbaden has reported that capital investment jumped by 1.8% in January-March, with building activity surging by 2.3%. Consumers, though, were more restrained, as private consumption rose by 0.4%.
And that meant Germany’s GDP jumped by a punchy 0.7% in the last quarter, confirming the initial estimate two weeks ago.
Economists, though, reckon growth is now slowing....
German Final GDP, Q1 "Boosted by strong investment, but unlikely to last" @ClausVistesen #PantheonMacro
8.16am BST
08:16
Today’s eurogroup meeting begins at 3pm Brussels time, or 2pm in the UK.
And the AFP newswire explains why it matters:
Greece urgently needs the next tranche of bailout money to repay big loans to the European Central Bank (ECB) and IMF in July, and has already fallen behind in paying for everyday government duties and public sector wages.
The outcome of the meeting remains highly uncertain, due to a row between Greece’s creditors, the eurozone governments and the International Monetary Fund, over the state of the Greek economy and debt relief.
8.12am BST
08:12
Royal Bank of Canada’s economics team are quite confident that Greece’s creditors will agree to hand over €11bn of bailout loans today.
They told clients:
Today’s meeting of euro area finance ministers will be focused on Greece. On Sunday, the Greek parliament passed a package of tax increases and reforms along with the contentious contingency to be deployed in the event of the 2018 budget going off track. Assuming it finds the measures acceptable, Eurogroup is expected to disperse the next tranche of programme funds (c.€11bn) which would allow Greece to meet forthcoming debt repayments and clear arrears which have built up as the review has dragged on.
The focus then moves on to debt relief with the ministers set to discuss options for debt relief that have been drawn up by officials as the euro area looks to bridge the gap between it and the IMF on the sustainability of Greece’s debt and allow the IMF participate in the latest Greek programme.
7.47am BST
07:47
The agenda: Eurogroup meeting on Greece; Carney at parliament
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s nine months since Greece signed up to its third bailout, after months of torturous negotiations and deadlock climaxed in an all-night summit meeting.
And today, Athens could finally pass the first review of that programme, unlocking €11bn in loans to help ward off another financial crisis.
Eurozone finance ministers will gather in Brussels this lunchtime for a Eurogroup meeting. They are likely to agree that the austerity package of tax rises and reforms passed by Greek MPs on Sunday go far enough.
But the relief could be short-lived. Although Greece will get a pat on the head for doing its best, there are still serious tensions between its creditors.
Last night, the International Monetary Fund made a significant intervention, warning that the Eurozone’s plans to give Greece some debt relief simply don’t go far enough.
It also insisted that Greece’s fiscal targets are simply unachievable.
The Fund is pushing European creditors to forgo any Greek debt payments until 2040 and to also peg the borrowing costs at 1.5%. That would be politically awkward for some eurozone members, such as Germany, as it could expose them to further Greek bills.
The Fund also wants Greece’s debt relief wrapped up in two years, undermining the eurozone’s goal of delaying some debt relief until after the current bailout expires in 2018 (after the next German federal elections).
In a clear challenge to the eurozone, the IMF declares:
“The implementation of debt relief should be completed by the end of the programme period.
“Providing an upfront, unconditional component to debt relief is critical to provide a strong and credible signal to markets about the commitment of official creditors to ensuring debt sustainability, which in itself could contribute to lowering market financing costs. An upfront component can also help garner more ownership for reforms.”
Related: IMF tells EU it must give Greece unconditional debt relief
So it could be a difficult meeting....
Also coming up today...
Bank of England governor Mark Carney will be in the spotlight this morning, when he testifies to parliament about the latest Quarterly Inflation Report.
He’ll surely face criticism from pro-Brexit MPs, over his prediction that Britain could fall into recession if it leaves the EU.
The
punch-up
hearing starts at 10am, and City experts are predicting a lively one....
Best way to make money today may be selling tickets to the inevitable ding-dong between Governor Carney and Conservative MP Jacob Rees-Mogg.
Before that, the latest UK public finance figures are released, at 9.30am, showing how much Britain had to borrow in April.
DIY chain Kingfisher and building society Nationwide are both reporting result this morning. Oil giant Shell is holding its AGM.
And we’re also getting two pieces of German data. The second estimate of GDP in the last quarter is just being released, confirming that the economy grew by 0.7%. The ZEW institute is publishing its estimate of investor confidence at 10am.
Updated
at 8.20am BST