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| Eurozone crisis live: EU summit focuses on growth | Eurozone crisis live: EU summit focuses on growth |
| (40 minutes later) | |
| 2.51pm: Here's an interesting tale from Greece. | |
| A number of people are being questioned on the island of Samas after a man was found carrying almost a million euros of counterfeit banknotes in his luggage. | |
| No mention of them finding any counterfeit drachma.... | |
| 2.46pm: Stock markets seem to be taking the day's developments fairly calmly. | |
| With no key US data to bother the scoreboard, the Dow Jones Industrial Average has opened around 10 points lower. After an earlier wobble on the news that Spain had set a 2012 deficit target of 5.8% of gross domestic product - compared to the 4.4% agreed with Brussels - European markets have edged back up. The FTSE 100 is currently down 9.62 points at 5921.63. | |
| Martin Farrar has left the building now, by the way, having overdosed on olive oil, and has left the blog in my hands, Nick Fletcher. | |
| 2.09pm: Here's Ian's full story in which he also points out that Cameron lobbied again for the 17 eurozone countries to provide a bigger firewall to prevent the crisis spreading. | 2.09pm: Here's Ian's full story in which he also points out that Cameron lobbied again for the 17 eurozone countries to provide a bigger firewall to prevent the crisis spreading. |
| Many think this can be done by combining the €250bn left in the eurozone's temporary bailout fund, the European financial stability facility (EFSF), with the future €500bn European stability mechanism (ESM). Germany has been against the creation of such a super-fund and Ian reports that 'Chancellor Merkel tetchily dismissed the demand from the prime minister'. | |
| However, the euro heads' statement says they will reassess the size of the firewall and it is possible they have been influenced by ECB president Mario Draghi who reportedly told leaders at a dinner last night that his injection of cheap money for the banks would not be repeated. The ECB has provided two tranches of cheap loans - €489bn in December and €530bn this week, equivalent to nearly 10% of euro zone output. | |
| Reuters reports: | Reuters reports: |
| Officials said Draghi had told the leaders that the central bank's provision of more than 1 trillion euros of cheap three-year loans was not going to be repeated. It had merely brought the euro zone time, he said, and made it essential that structural reforms were pushed through promptly. | Officials said Draghi had told the leaders that the central bank's provision of more than 1 trillion euros of cheap three-year loans was not going to be repeated. It had merely brought the euro zone time, he said, and made it essential that structural reforms were pushed through promptly. |
| "We will use this time," said Merkel. "We will certainly not take such additional measures. The liquidity goes out of the market again." | "We will use this time," said Merkel. "We will certainly not take such additional measures. The liquidity goes out of the market again." |
| "We've got three years to reform, otherwise things are going to get very complicated," said one euro zone diplomat. | "We've got three years to reform, otherwise things are going to get very complicated," said one euro zone diplomat. |
| 1.29pm: Our Europe editor Ian Traynor, pictured, has been monitoring events in Brussels today and writes that Britain, although, it has won support from some unlikely countries for greater deregulation to support growth, is still arguing the toss with France. | 1.29pm: Our Europe editor Ian Traynor, pictured, has been monitoring events in Brussels today and writes that Britain, although, it has won support from some unlikely countries for greater deregulation to support growth, is still arguing the toss with France. |
| Here's the top lines from Ian's story, which will be on the main site soon: | Here's the top lines from Ian's story, which will be on the main site soon: |
| European leaders today sought to refocus their efforts to tame the financial and economic crisis away from the crushing austerity programmes hitting much of Europe and towards policies to boost growth. | European leaders today sought to refocus their efforts to tame the financial and economic crisis away from the crushing austerity programmes hitting much of Europe and towards policies to boost growth. |
| But while an EU summit in Brussels agreed on the need for growth, there were bitter disputes over the means to that end, with France and Britain at loggerheads over how best to kickstart moribund economies. | But while an EU summit in Brussels agreed on the need for growth, there were bitter disputes over the means to that end, with France and Britain at loggerheads over how best to kickstart moribund economies. |
| After complaining on Thursday evening that no one in Europe was listening to him, David Cameron on Friday claimed that the summit had gone his way and that he had converted the rest of the EU leaders to his free market vision of deregulation and liberalising services. | After complaining on Thursday evening that no one in Europe was listening to him, David Cameron on Friday claimed that the summit had gone his way and that he had converted the rest of the EU leaders to his free market vision of deregulation and liberalising services. |
| "The [summit] communiqué has been fundamentally rewritten in line with our demands," the prime minister asserted. "Our letter really did become the agenda for the European Council [summit]." | "The [summit] communiqué has been fundamentally rewritten in line with our demands," the prime minister asserted. "Our letter really did become the agenda for the European Council [summit]." |
| That view that was dismissed by other European officials as "nonsense". | That view that was dismissed by other European officials as "nonsense". |
| . | . |
| 1.16pm: A reader, Sualdam, makes the point that since the treaty is not in force yet why are we talking about Spain facing possible sanctions. A fair point but the treaty will come into force and on current prices Spain doesn't stand a chance of meeting its targets and therefore it looks likely it will be fined by the EU. | 1.16pm: A reader, Sualdam, makes the point that since the treaty is not in force yet why are we talking about Spain facing possible sanctions. A fair point but the treaty will come into force and on current prices Spain doesn't stand a chance of meeting its targets and therefore it looks likely it will be fined by the EU. |
| A spokesman for the European Commission said today that there was no chance they would move the goalposts. AP reports that the spokesman, Amadeu Altafaj Tardio said: | A spokesman for the European Commission said today that there was no chance they would move the goalposts. AP reports that the spokesman, Amadeu Altafaj Tardio said: |
| The excessive deficit procedure foresees a target of 4.4% in 2012. Therefore our assessment is based on that target. | The excessive deficit procedure foresees a target of 4.4% in 2012. Therefore our assessment is based on that target. |
| He also warned that Madrid, which currently has unemployment higher than 20 percent and a shaky banking sector, could come under renewed market pressure if it fails to rein in its deficit. | He also warned that Madrid, which currently has unemployment higher than 20 percent and a shaky banking sector, could come under renewed market pressure if it fails to rein in its deficit. |
| There is an issue of confidence at stake here. | There is an issue of confidence at stake here. |
| He added that the Commission still wants Madrid to provide details on why last year's deficit was so much higher than expected and what it plans to do about it this year before the end of the month. | He added that the Commission still wants Madrid to provide details on why last year's deficit was so much higher than expected and what it plans to do about it this year before the end of the month. |
| 1.01pm: Spain has admitted that it will miss its budget deficit targets for this year, risking possible sanctions from the EU. | 1.01pm: Spain has admitted that it will miss its budget deficit targets for this year, risking possible sanctions from the EU. |
| Prime minister Mariano Rajoy said the deficit will reach 5.8% of GDP this year, busting this year's target of 4.4% promised to other EU states. But he said Spain would still meet next year's target of 3%. Spain missed last year's 6 percent deficit target it recorded a 8.5 percent total instead. | Prime minister Mariano Rajoy said the deficit will reach 5.8% of GDP this year, busting this year's target of 4.4% promised to other EU states. But he said Spain would still meet next year's target of 3%. Spain missed last year's 6 percent deficit target it recorded a 8.5 percent total instead. |
| 12.43pm: The European Council representing the whole 27 has also released a statement setting out what was agreed this morning. As promised the focus is on growth and the statement sets out an exhaustive 24 points. These can be roughly summarised as follows: | 12.43pm: The European Council representing the whole 27 has also released a statement setting out what was agreed this morning. As promised the focus is on growth and the statement sets out an exhaustive 24 points. These can be roughly summarised as follows: |
| • promote growth but not if it breaks the new 3% deficit rules • make tax systems more efficient, ie collect more tax • increase overall employment in the EU to 75% by 2020 by making it easier to hire people and reducing red tape • strengthen the single market and remove trade barriers. Commission to provide a 'transparent scoreboard' of each nation's progress to aid reform by 'peer pressure' • promote innovation and research • complete reform of banks and ratings agencies, and encourage lending to businesses | • promote growth but not if it breaks the new 3% deficit rules • make tax systems more efficient, ie collect more tax • increase overall employment in the EU to 75% by 2020 by making it easier to hire people and reducing red tape • strengthen the single market and remove trade barriers. Commission to provide a 'transparent scoreboard' of each nation's progress to aid reform by 'peer pressure' • promote innovation and research • complete reform of banks and ratings agencies, and encourage lending to businesses |
| 12.35pm: It's all over in Brussels and we're busy picking the bones out of various press conferences. David Cameron is claiming victory because he thinks he has won the support of some Mediterranean countries for his vision of how to stimulate growth in Europe, eg deregulation etc. Not sure if that's exactly how the history will be written but our Europe editor Ian Traynor is on the case and will file soon. | 12.35pm: It's all over in Brussels and we're busy picking the bones out of various press conferences. David Cameron is claiming victory because he thinks he has won the support of some Mediterranean countries for his vision of how to stimulate growth in Europe, eg deregulation etc. Not sure if that's exactly how the history will be written but our Europe editor Ian Traynor is on the case and will file soon. |
| The eurozone governments have put out a statement here confirming the bailout deal for greece ie deal with private creditors, more reforms, greater scrutiny by troika officials etc. It also says they will reassess the size of the firewall needed for the euro - ie the EFSF/ESM - but it stays the same for now. | The eurozone governments have put out a statement here confirming the bailout deal for greece ie deal with private creditors, more reforms, greater scrutiny by troika officials etc. It also says they will reassess the size of the firewall needed for the euro - ie the EFSF/ESM - but it stays the same for now. |
| 12.12pm: Sony Kapoor, managing director of Re-Define, an economic think tank, has sent us his thoughts on the European summit. | 12.12pm: Sony Kapoor, managing director of Re-Define, an economic think tank, has sent us his thoughts on the European summit. |
| This European summit reeked of missed opportunities, premature celebration and underserved backslapping. This may come back to haunt our leaders sooner than they think. | This European summit reeked of missed opportunities, premature celebration and underserved backslapping. This may come back to haunt our leaders sooner than they think. |
| Even as there are doubts as to whether the acute phase of the eurocrisis characterised by panic and spiking spreads is actually behind us, the chronic long-drawn out painful phase of increasing unemployment, deepening recession and worsening politics has begun in earnest. | Even as there are doubts as to whether the acute phase of the eurocrisis characterised by panic and spiking spreads is actually behind us, the chronic long-drawn out painful phase of increasing unemployment, deepening recession and worsening politics has begun in earnest. |
| Allocating the unused EFSF guarantees to double the resources of the European Investment Bank would be a far better use of that money than increasing the size of the rescue fund and will help kick-start the growth that Europe is increasingly desperate for. | Allocating the unused EFSF guarantees to double the resources of the European Investment Bank would be a far better use of that money than increasing the size of the rescue fund and will help kick-start the growth that Europe is increasingly desperate for. |
| Never have so many, spend so much time on something that so few wanted in the first place and which is largely irrelevant to tackling the crisis. | Never have so many, spend so much time on something that so few wanted in the first place and which is largely irrelevant to tackling the crisis. |
| One look at the UK where economy is sclerotic despite the Bank of England's heroic interventions shows the limits of what ECB support alone can achieve. | One look at the UK where economy is sclerotic despite the Bank of England's heroic interventions shows the limits of what ECB support alone can achieve. |
| 11.30am: Our Ireland correspondent Henry McDonald has been watching events in Brussels from Dublin's perspective. With ireland the only country so far to announce a referendum on the fiscal compact, it is sure to attract of lot of attentionm in coming weeks but as Henry says, the Taoiseach is playimng it straight so far: | 11.30am: Our Ireland correspondent Henry McDonald has been watching events in Brussels from Dublin's perspective. With ireland the only country so far to announce a referendum on the fiscal compact, it is sure to attract of lot of attentionm in coming weeks but as Henry says, the Taoiseach is playimng it straight so far: |
| Enda Kenny was among the EU leaders who signed today's fiscal compact treaty even though his government cannot officially endorse the pact until the nation's voters ratify it in the forthcoming referendum. | Enda Kenny was among the EU leaders who signed today's fiscal compact treaty even though his government cannot officially endorse the pact until the nation's voters ratify it in the forthcoming referendum. |
| Before putting his pen to a paper his people have yet to endorse the Taoiseach acknowledged that Irish voters would not be "bribed" with offers from Europe to lower Ireland's debt interest rate or the amount of money the Republic has to pay back for the Anglo Irish Bank's multi billion euro bank debts. | Before putting his pen to a paper his people have yet to endorse the Taoiseach acknowledged that Irish voters would not be "bribed" with offers from Europe to lower Ireland's debt interest rate or the amount of money the Republic has to pay back for the Anglo Irish Bank's multi billion euro bank debts. |
| All of the Irish Cabinet are signing from the same hymn sheet it seems as his Finance Minister Michael Noonan also stressed today that voters would not either be coerced or induced into saying Yes to the treaty, which is of course the outcome the Irish government wants. | All of the Irish Cabinet are signing from the same hymn sheet it seems as his Finance Minister Michael Noonan also stressed today that voters would not either be coerced or induced into saying Yes to the treaty, which is of course the outcome the Irish government wants. |
| 11.18am: On a more serious note, figures out this morning show that the prices eurozone manufacturers are charging for their goods went up 0.7% in January due to higher fuel costs. That equals a 3.7% rise on a year ago, which higher inflation currently running at 2.7%. | 11.18am: On a more serious note, figures out this morning show that the prices eurozone manufacturers are charging for their goods went up 0.7% in January due to higher fuel costs. That equals a 3.7% rise on a year ago, which higher inflation currently running at 2.7%. |
| As several commentators have already noted, the ECB will be disappointed with the prospect of inflation creeping up again - just when it looked the eurozone was beginning to stabilise. (Some would say, of course, that it's their own fault for throwing money at the banks, but that's another matter). | As several commentators have already noted, the ECB will be disappointed with the prospect of inflation creeping up again - just when it looked the eurozone was beginning to stabilise. (Some would say, of course, that it's their own fault for throwing money at the banks, but that's another matter). |
| Howard Archer, of IHS Global Insight, reckons: | Howard Archer, of IHS Global Insight, reckons: |
| Following on from news that Eurozone consumer price inflation edged back up to 2.7% in February from 2.6% in January, this fuels (no pun intended – well maybe!) concern that higher oil prices will lead to inflation being markedly stickier than hoped for over the coming months, thereby maintaining a significant squeeze on consumers' purchasing power and making it harder for the ECB to cut interest rates further if the Eurozone economy continues to contract. | Following on from news that Eurozone consumer price inflation edged back up to 2.7% in February from 2.6% in January, this fuels (no pun intended – well maybe!) concern that higher oil prices will lead to inflation being markedly stickier than hoped for over the coming months, thereby maintaining a significant squeeze on consumers' purchasing power and making it harder for the ECB to cut interest rates further if the Eurozone economy continues to contract. |
| It is odds-on that the ECB will keep interest rates unchanged at 1.00% at its 8 March policy meeting. Indeed, the ECB seems likely to remain firmly in "wait and see" mode for some time. Even so, we still expect interest rates to be eventually trimmed from 1.00% to 0.75% as Eurozone economic activity remains soft overall and fragile | It is odds-on that the ECB will keep interest rates unchanged at 1.00% at its 8 March policy meeting. Indeed, the ECB seems likely to remain firmly in "wait and see" mode for some time. Even so, we still expect interest rates to be eventually trimmed from 1.00% to 0.75% as Eurozone economic activity remains soft overall and fragile |
| 11.09am: Another reader, eatmorealfalfa, backs up the last point about oilve oil. | 11.09am: Another reader, eatmorealfalfa, backs up the last point about oilve oil. |
| myrmigki also made the point that when buying olive oil you should check the label to see if it says 'bottled in Italy' or 'produced in Italy'. I know the first thing I'll be doing when I get in later. | myrmigki also made the point that when buying olive oil you should check the label to see if it says 'bottled in Italy' or 'produced in Italy'. I know the first thing I'll be doing when I get in later. |
| 11.04am: Interesting contribution from myrmigki. Basically, he/she, says, Italian olive oil is made from Spanish and Greek olives anyway. Feeling quite exposed on olive oil knowledge here but keep them coming. I'll never look at another bottle in the same way again. | 11.04am: Interesting contribution from myrmigki. Basically, he/she, says, Italian olive oil is made from Spanish and Greek olives anyway. Feeling quite exposed on olive oil knowledge here but keep them coming. I'll never look at another bottle in the same way again. |
| 10.46am: We should get an instant test of how the fiscal compact might (or might not) work today with Spain due to announce new spending cuts, according to Reuters. Problem is the €15bn worth of cuts won't be enough to reduce its budget deficit to this year's target of 4.4% as our report points out. | 10.46am: We should get an instant test of how the fiscal compact might (or might not) work today with Spain due to announce new spending cuts, according to Reuters. Problem is the €15bn worth of cuts won't be enough to reduce its budget deficit to this year's target of 4.4% as our report points out. |
| It will make for a pretty sticky morning for Spanish prime minister Mariano Rajoy, who will have to try to convince his counterparts to relax the rules and let him off the fine. Should be interesting. Bit like a Mulligan in golf where if a player duffs their shot into the bushes they can have another go. Well, Bill Clinton likes them. As in politics as in life. | It will make for a pretty sticky morning for Spanish prime minister Mariano Rajoy, who will have to try to convince his counterparts to relax the rules and let him off the fine. Should be interesting. Bit like a Mulligan in golf where if a player duffs their shot into the bushes they can have another go. Well, Bill Clinton likes them. As in politics as in life. |
| 10.19am: Forget the fiscal compact, bond yields, the LTRO, QE, - the real important issue in all this chaos is olive oil. Earlier I suggested that what we really need to happen is for German consumers to start spending some of their hard-earned on, for example, Greek olive oil. I said this in a throwaway fashion, as an example of what the good burghers could do to help their fellow eurozoners. | 10.19am: Forget the fiscal compact, bond yields, the LTRO, QE, - the real important issue in all this chaos is olive oil. Earlier I suggested that what we really need to happen is for German consumers to start spending some of their hard-earned on, for example, Greek olive oil. I said this in a throwaway fashion, as an example of what the good burghers could do to help their fellow eurozoners. |
| But Mancuniswede objects, insisting that Italian olive oil is superior. Kizbot, however, believes that they really should buy Greek. This makes me think that maybe we should all buy more Greek olive oil. I can't think I've ever seen a Greek brand of olive oil. There must be one but can't think of it. Gap in the market surely? Or is it just true that it's no good? | But Mancuniswede objects, insisting that Italian olive oil is superior. Kizbot, however, believes that they really should buy Greek. This makes me think that maybe we should all buy more Greek olive oil. I can't think I've ever seen a Greek brand of olive oil. There must be one but can't think of it. Gap in the market surely? Or is it just true that it's no good? |
| 9.57am: Herman van Rompuy, the slightly 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. | 9.57am: Herman van Rompuy, the slightly 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. | 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: | 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. | 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. | 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 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. | 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. | 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. |