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| Eurozone crisis live: EU summit focuses on growth | Eurozone crisis live: EU summit focuses on growth |
| (40 minutes later) | |
| 9.57am: Herman van Rompuy, the slighty gnomic president of the European Council, has given a little pep talk to the 25 heads of government who signed up to the new fiscal rulebook this morning. | |
| Signing was the easy bit because now the 25 have to go back and ratify the treaty, which has been set up outside the usual EU structures because Britain and the Czech Republic refused to allow EU institutions such as the Commission to be invloved in enforcing the rules. Ireland, as we saw this week, is already planning a referendum. | |
| Speaking after the signing, van Rompuy said: | |
| You now all have to convince your parliaments and voters that this treaty is an important step to bring the euro durably back into safe waters. I am most confident you will succeed. The treaty is short and sharp. Its benefits are clear. And above all, you are all gifted politicians, otherwise you would not be here. | |
| 9.36am: More decent news for the British economy. The construction sector grew at its fastest pace in nearly a year last month and firms have become more optimistic about future prospects as new orders rose at their fastest for 21 months. | |
| The Markit/CIPS purchasing managers' index jumped from 51.4 to 54.3. Most analysts had predicted a fall. A level below 50 indicates that most expect a contraction, while above 50 is growth. | |
| The construction industry was very badly hit by the 2008-09 recession but it has been recovering and several housebuilders such as Taylor Wimpey and Redrow have reported better prospects in recent updates. | |
| 9.20am: There's always time for a quick update from Greece on the liveblog and today is no different. Our reporter Rupert Neate, pictured, is in Greece this week where he has news of the latest political developments there. | 9.20am: There's always time for a quick update from Greece on the liveblog and today is no different. Our reporter Rupert Neate, pictured, is in Greece this week where he has news of the latest political developments there. |
| Greece's centre-left Pasok party has announced plans to elect a new leader to succeed George Papandreou, the former prime minister. Papandreou will tomorrow chair a meeting of the party's political council to prepare the ground for the official announcement of leadership candidates on Sunday. | Greece's centre-left Pasok party has announced plans to elect a new leader to succeed George Papandreou, the former prime minister. Papandreou will tomorrow chair a meeting of the party's political council to prepare the ground for the official announcement of leadership candidates on Sunday. |
| Christos Papoutsis, who resigned as citizens' protection minister earlier this week revealed his intention to contest the leadership on TV last night. However, finance minister Evangelos Venizelos, who hasn't yet officially entered the race, is expected to comfortably beat Papoutsis, who has been criticised for his handling of the police's response to anti-austerity protests. | |
| 9.08am: The fiscal compact setting out new rules for the EU has been signed this morning by the 25 countries who have agreed to get involved. Britain and the Czechs have of course decided not to sign up. | 9.08am: The fiscal compact setting out new rules for the EU has been signed this morning by the 25 countries who have agreed to get involved. Britain and the Czechs have of course decided not to sign up. |
| The key agreement is that countries should not have a budget deficit exceeding 3%. Some might struggle with that, as our Europe editor Ian Traynor pointed out last night. | The key agreement is that countries should not have a budget deficit exceeding 3%. Some might struggle with that, as our Europe editor Ian Traynor pointed out last night. |
| Anyway, the full text is here. | Anyway, the full text is here. |
| 8.58am: The EU's discussion about growth comes against a backdrop of massive support for the financial system from the ECB this week and from other central banks. But the question we should all be asking is, will it do any good? | 8.58am: The EU's discussion about growth comes against a backdrop of massive support for the financial system from the ECB this week and from other central banks. But the question we should all be asking is, will it do any good? |
| Peter Sands, boss of Standard Chartered bank, this week said that QE and the ECB's similar LTRO scheme were 'laying the seeds for the next crisis' and today's record deposists at the ECB show that banks are not lending the money, they're hoarding it. | Peter Sands, boss of Standard Chartered bank, this week said that QE and the ECB's similar LTRO scheme were 'laying the seeds for the next crisis' and today's record deposists at the ECB show that banks are not lending the money, they're hoarding it. |
| Gary Jenkins, the bond markets guru at Swordfish Research, takes up the theme in his morning note: | Gary Jenkins, the bond markets guru at Swordfish Research, takes up the theme in his morning note: |
| I guess the ECB have demonstrated that you can have quite an impact when you throw a trillion euros at a problem. What has not been demonstrated yet is that QE leads to a sustainable economic recovery. It certainly hasn't done that for Japan ... and it's far too early for the others. The US economic data suggests that we might be seeing a recovery there but we need it to be sustainable to find out exactly what happens to bond yields in a growth environment after they have been artificially lowered. Although I think it is fair to say that we would expect them to rise quickly and significantly. | I guess the ECB have demonstrated that you can have quite an impact when you throw a trillion euros at a problem. What has not been demonstrated yet is that QE leads to a sustainable economic recovery. It certainly hasn't done that for Japan ... and it's far too early for the others. The US economic data suggests that we might be seeing a recovery there but we need it to be sustainable to find out exactly what happens to bond yields in a growth environment after they have been artificially lowered. Although I think it is fair to say that we would expect them to rise quickly and significantly. |
| If QE does not result in sustainable economic growth then it would be useful to have a captive domestic saving base such as Japan but it will probably be that we find the answer to that question in Europe first. | If QE does not result in sustainable economic growth then it would be useful to have a captive domestic saving base such as Japan but it will probably be that we find the answer to that question in Europe first. |
| Anyhow whatever the longer term implications the fact is that the European version has had the desired effect in the short term and quite possibly averted a meltdown scenario. Yesterday Italian 10 year yields traded through 5% and closed 23bps lower at 4.94%. They ended 2011 at 7%. The 2-year fell 38bps to 1.72% against an end of year figure of 5%. So dramatic falls for the country that was the biggest concern for investors last year and coming into this year. Of course the concerns may raise their ugly heads again if we do not see any growth in Italy over the medium term, but at the back end of 2011 the ECB probably decided that medium term concerns were a luxury they could not afford. Potential inability to fund itself in the next quarter was a more pressing problem. | Anyhow whatever the longer term implications the fact is that the European version has had the desired effect in the short term and quite possibly averted a meltdown scenario. Yesterday Italian 10 year yields traded through 5% and closed 23bps lower at 4.94%. They ended 2011 at 7%. The 2-year fell 38bps to 1.72% against an end of year figure of 5%. So dramatic falls for the country that was the biggest concern for investors last year and coming into this year. Of course the concerns may raise their ugly heads again if we do not see any growth in Italy over the medium term, but at the back end of 2011 the ECB probably decided that medium term concerns were a luxury they could not afford. Potential inability to fund itself in the next quarter was a more pressing problem. |
| 8.39am: Just watching the live feed from the EU and the leaders are gathering for a meeting of the European Council. I've seen better live telly but it has a certain excitement. Ange, Sarko, Neil Kinnock's daughter-in-law - they're all there chatting away, meeting and greeting. But now they're all sitting down so the business is about to start. Possibly. | 8.39am: Just watching the live feed from the EU and the leaders are gathering for a meeting of the European Council. I've seen better live telly but it has a certain excitement. Ange, Sarko, Neil Kinnock's daughter-in-law - they're all there chatting away, meeting and greeting. But now they're all sitting down so the business is about to start. Possibly. |
| Meanwhile, I wonder how our very own David Cameron spent his spare time when his counterparts were signing the fiscal compact this morning? Did he go back for seconds at the breakfast buffet? With all those pesky Europeans out of the way, was he able to enjoy his fry-up in peace or did the sight of the muesli and croissants put him off his bacon and eggs? Because surely, in his moment of isolation, he needed to eat a fry-up. Makes it all worthwhile. | Meanwhile, I wonder how our very own David Cameron spent his spare time when his counterparts were signing the fiscal compact this morning? Did he go back for seconds at the breakfast buffet? With all those pesky Europeans out of the way, was he able to enjoy his fry-up in peace or did the sight of the muesli and croissants put him off his bacon and eggs? Because surely, in his moment of isolation, he needed to eat a fry-up. Makes it all worthwhile. |
| 8.23am: Figures just released show that banks are holding onto the cash they have taken from the ECB and depositing back with the central bank. With balances swollen by the huge loans under the longer-term refinancing operation, banks deposited a total of €777bn overnight with the ECB. Pretty certain that's a new record. | 8.23am: Figures just released show that banks are holding onto the cash they have taken from the ECB and depositing back with the central bank. With balances swollen by the huge loans under the longer-term refinancing operation, banks deposited a total of €777bn overnight with the ECB. Pretty certain that's a new record. |
| 8.16am: Barclays has confirmed this morning that it has helped itself to €8.2bn, or £6.7bn, under the European Central Bank's scheme of bolstering banks with cheap money. | 8.16am: Barclays has confirmed this morning that it has helped itself to €8.2bn, or £6.7bn, under the European Central Bank's scheme of bolstering banks with cheap money. |
| Barclays said the money would be used to plug gaps in its operations in crisis-hit Spain and Portugal. €6.2bn has been earmarked just for Spain. | Barclays said the money would be used to plug gaps in its operations in crisis-hit Spain and Portugal. €6.2bn has been earmarked just for Spain. |
| The second phase of the so-called longer-term refinancing operation was announced on Wednesday and saw banks take €529bn of loans at 1% from the ECB. They took €489bn just before Christmas in a scheme likened to quantitative easing used in the UK and US to support the financial system. Barclays did not take part in the first round of the LTRO. | The second phase of the so-called longer-term refinancing operation was announced on Wednesday and saw banks take €529bn of loans at 1% from the ECB. They took €489bn just before Christmas in a scheme likened to quantitative easing used in the UK and US to support the financial system. Barclays did not take part in the first round of the LTRO. |
| 8.02am: Right on cue, new unemployment figures from Spain underline that last point. The jobless rate rose 2.4% in February compared to January, leaving well over 5 million people out of work. Spain already has the highest unemployment in Europe. | 8.02am: Right on cue, new unemployment figures from Spain underline that last point. The jobless rate rose 2.4% in February compared to January, leaving well over 5 million people out of work. Spain already has the highest unemployment in Europe. |
| 7.51am: Economic data out this week should be focusing the minds of EU leaders when they discuss growth at today' summit in Brussels, as Michael Hewson, senior market analyst at CMC says in his morning note. | 7.51am: Economic data out this week should be focusing the minds of EU leaders when they discuss growth at today' summit in Brussels, as Michael Hewson, senior market analyst at CMC says in his morning note. |
| The need for actions with respect to Europe's economy could not have been underscored more starkly than by yesterday's unemployment figures which showed that the current focus on fiscal austerity was sending unemployment rates sharply higher, particularly in southern Europe. | The need for actions with respect to Europe's economy could not have been underscored more starkly than by yesterday's unemployment figures which showed that the current focus on fiscal austerity was sending unemployment rates sharply higher, particularly in southern Europe. |
| Protests across Europe seem to capture the mood in Portugal and Spain especially with EU leaders determined to press ahead with their much vaunted fiscal compact despite a widespread acceptance that Spain will miss its budget targets and a refusal by EU leaders to consider concessions in the face of all this unrest. | Protests across Europe seem to capture the mood in Portugal and Spain especially with EU leaders determined to press ahead with their much vaunted fiscal compact despite a widespread acceptance that Spain will miss its budget targets and a refusal by EU leaders to consider concessions in the face of all this unrest. |
| Whatever EU leaders decide the soaring price of oil could potentially derail any plans after it again hit record euro and sterling highs last night on reports of an explosion at a Saudi Arabian oil pipeline. | Whatever EU leaders decide the soaring price of oil could potentially derail any plans after it again hit record euro and sterling highs last night on reports of an explosion at a Saudi Arabian oil pipeline. |
| 7.23am: Morning all. Already quite a bit to talk about in euroland, notably an unexpected 1.6% fall in German retail sales in January compared with December. Most experts had predicted a rise in the monthly figure although sales were up 1.6% compared with last January. The index is notoriously volatile but if German consumers are continuing to save instead of splurging on, say, Greek olive oil, then the European economy has still got problems. | 7.23am: Morning all. Already quite a bit to talk about in euroland, notably an unexpected 1.6% fall in German retail sales in January compared with December. Most experts had predicted a rise in the monthly figure although sales were up 1.6% compared with last January. The index is notoriously volatile but if German consumers are continuing to save instead of splurging on, say, Greek olive oil, then the European economy has still got problems. |
| The reluctance of shoppers in the eurozone's richest and most populous country to spend will also cast a shadow over the talks in Brussels today aimed at setting out measures to encourage growth. | The reluctance of shoppers in the eurozone's richest and most populous country to spend will also cast a shadow over the talks in Brussels today aimed at setting out measures to encourage growth. |
| The EU summit is among today's highlights but here's the line-up so far: | The EU summit is among today's highlights but here's the line-up so far: |
| • European leaders - except David Cameron and the Czech PM - will sign the new fiscal compact this morning at 8.30 before going to discuss growth. Cameron will be included in that bit. | • European leaders - except David Cameron and the Czech PM - will sign the new fiscal compact this morning at 8.30 before going to discuss growth. Cameron will be included in that bit. |
| • Latest data on the UK construction due at 9.30am. | • Latest data on the UK construction due at 9.30am. |
| • Markets will be watching closely to see what happens to the price of oil, which could kibosh any hopes for more growth in the west. | • Markets will be watching closely to see what happens to the price of oil, which could kibosh any hopes for more growth in the west. |