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| Eurozone crisis live: 5.6m out of work as pressure piles on Spain | Eurozone crisis live: 5.6m out of work as pressure piles on Spain |
| (40 minutes later) | |
| 11.42am: To underline the point about the increasingly central debate about austerity, Ian Traynor has been looking at an interview with Angela Merkel in the German press which sets her up for a potentially brusing clash with her neighbour if Francois Hollande wins the French election next weekend. | |
| Basically she says the fiscal pact cannot be renegotiated. | |
| Ian writes: | |
| Campaign noise? Or are we really heading for a bruising Berlin encounter as soon as Francois Hollande takes the Elysee? (Hollande 10 points ahead of Sarkozy in new poll this morning). | |
| Chancellor Angela Merkel has strayed back into the French campaign, declaring in no uncertain terms that Hollande's calls for renegotiating the euro fiscal pact are futile. | |
| In an interview published this morning by Germany's large Westdeutsche Allgemeine Zeitungsgruppe, Merkel also reasserts her support for Sarkozy as a political ally with whom she has worked closely throughout the euro crisis. Merkel said: | |
| 'The fiscal pact has been negotiated. It was signed by 25 heads of government and has already been ratified by Portugal and Greece. Parliaments everywhere in Europe are poised to pass it. There's a referendum on it in Ireland at the end of May. It cannot be re-negotiated.' | |
| Hollande's response was equally to the point when news of the interview filtered out last night, telling French TV that "Germany can't decide on its own for all of Europe". | |
| Ian goes on: | |
| If he is elected president, he will have a clear mandate from the French people to re-open the pact, Hollande insists, regardless of its ratification stage. | |
| Herman Van Rompuy, who runs EU summits as president of the European Council, has written to EU leaders this morning telling them he might summon them to an "informal dinner" in Brussels before the next scheduled summit at the end of June. Early June is being talked about in Brussels. | |
| Reflecting the change in tone on how to tackle the euro crisis, triggered by Hollande and Mario Monti in Italy, Van Rompuy told the 27 national leaders: "We have had to deal with the urgent pressures of the sovereign debt crisis. The emphasis should now shift increasingly to prioritising measures that can boost growth and jobs." | |
| 11.22am: Nearly five years on from the start of the financial crisis and banks are still apologising. It's the turn of Barclays today with chairman Marcus Agius telling the group's agm that chief executive Bob Diamond's pay award was handled badly. | 11.22am: Nearly five years on from the start of the financial crisis and banks are still apologising. It's the turn of Barclays today with chairman Marcus Agius telling the group's agm that chief executive Bob Diamond's pay award was handled badly. |
| Our City editor Jill Treanor is blogging this big event here. | Our City editor Jill Treanor is blogging this big event here. |
| 11.06am: Spain's government will need no reminder that the the key issue in Europe now is whether the German-inspired drive towards €450bn worth of cuts across Europe can hold. We've already seen the Dutch government collapse under the pressure of trying to hit fiscal targets this week and the Czech leadership is also under threat as it trieds to cut. | |
| Joseph Stiglitz, the Nobel-prize winning economist, doesn't think that governments will be able to hold the line. Or at least thinks it will be diisastrous if they do. Yesterday he described the pursuit of austerity measures as "suicidal". | Joseph Stiglitz, the Nobel-prize winning economist, doesn't think that governments will be able to hold the line. Or at least thinks it will be diisastrous if they do. Yesterday he described the pursuit of austerity measures as "suicidal". |
| According to Bloomberg, he told reporters in Vienna: | According to Bloomberg, he told reporters in Vienna: |
| There has never been any successful austerity programme in any large country. The European approach definitely is the least promising. I think Europe is headed to a suicide. | There has never been any successful austerity programme in any large country. The European approach definitely is the least promising. I think Europe is headed to a suicide. |
| If Greece was the only part of Europe that was having austerity, authorities could ignore it, Stiglitz said, "but if you have the UK, France, you know all the countries having austerity, it's like a joint austerity and the economic consequences of that are going to be dire." | If Greece was the only part of Europe that was having austerity, authorities could ignore it, Stiglitz said, "but if you have the UK, France, you know all the countries having austerity, it's like a joint austerity and the economic consequences of that are going to be dire." |
| 10.50am: The markets seem to have shaken off their early pessimism and are heading back up again. FTSE 100 is up 0.16% while, remarkably, Spain's Ibex is now up 0.26%. | 10.50am: The markets seem to have shaken off their early pessimism and are heading back up again. FTSE 100 is up 0.16% while, remarkably, Spain's Ibex is now up 0.26%. |
| Perhaps Italy's successful, though expensive, foray into the bond markets this morning has helped calm some nerves. | Perhaps Italy's successful, though expensive, foray into the bond markets this morning has helped calm some nerves. |
| 10.33am: It's a busy day in euroland and our Europe editor Ian Traynor has been looking at a survey of bank lending by the ECB which suggests that its policy of pumping money into the eurozone is failing. | |
| Here he is: | Here he is: |
| Mario Draghi and the European Central Bank have been credited with, if not saving the euro, at least buying it quite a bit of time by throwing a trillion euros in cheap three-year loans at EU banks since December. | Mario Draghi and the European Central Bank have been credited with, if not saving the euro, at least buying it quite a bit of time by throwing a trillion euros in cheap three-year loans at EU banks since December. |
| The liquidity temporarily relieved the pressure in the bond markets, although there are fears that the policy could end up creating zombie banks. Another aim of the policy known as LTRO was to forestall a new credit crunch and to keep money flowing to small and medium-sized firms. | The liquidity temporarily relieved the pressure in the bond markets, although there are fears that the policy could end up creating zombie banks. Another aim of the policy known as LTRO was to forestall a new credit crunch and to keep money flowing to small and medium-sized firms. |
| It would appear that in this respect the policy is failing. An ECB survey released this morning of more than 7,500 small and medium-sized enterprises in the EU finds that the companies are asking for more loans and not getting them. | It would appear that in this respect the policy is failing. An ECB survey released this morning of more than 7,500 small and medium-sized enterprises in the EU finds that the companies are asking for more loans and not getting them. |
| "SMEs' external financing needs increased between October 2011 and March 2012," the survey finds. "Results show that access to bank loans continued to deteriorate; on balance, firms reported a worsening in the availability of bank loans (20%, up from 14% in the previous survey round). Moreover, the survey results point to somewhat higher rejection rates when applying for a loan (13%, up from 10%). Meanwhile, the percentage of respondents reporting access to finance as their main problem remained broadly unchanged (17%, compared with 16%)." | "SMEs' external financing needs increased between October 2011 and March 2012," the survey finds. "Results show that access to bank loans continued to deteriorate; on balance, firms reported a worsening in the availability of bank loans (20%, up from 14% in the previous survey round). Moreover, the survey results point to somewhat higher rejection rates when applying for a loan (13%, up from 10%). Meanwhile, the percentage of respondents reporting access to finance as their main problem remained broadly unchanged (17%, compared with 16%)." |
| 10.22am: Italy's borrowing costs have risen sharply this morning after auctions of 10 and five year bonds. It paid 5.84% compared with 5.24% last month to get away €5.95bn worth of bonds as the overnight downgrade of Spain made investors demand a higher yield. | 10.22am: Italy's borrowing costs have risen sharply this morning after auctions of 10 and five year bonds. It paid 5.84% compared with 5.24% last month to get away €5.95bn worth of bonds as the overnight downgrade of Spain made investors demand a higher yield. |
| The auction yield on five-year bonds also rose to 4.86% from 4.18%. | The auction yield on five-year bonds also rose to 4.86% from 4.18%. |
| Five and 10-year yields are now at their highest since January. | Five and 10-year yields are now at their highest since January. |
| 9.45am: Back to Spain and the foreign minister, Jose Manuel Garcia-Margallo, says today's economic data adds up to a "huge crisis" for the country. | 9.45am: Back to Spain and the foreign minister, Jose Manuel Garcia-Margallo, says today's economic data adds up to a "huge crisis" for the country. |
| The figures are terrible for everyone and terrible for the government ... Spain is in a crisis of huge proportions. | The figures are terrible for everyone and terrible for the government ... Spain is in a crisis of huge proportions. |
| More reaction to come from Spain. | More reaction to come from Spain. |
| 9.34am: There's no relief from the grimness this morning. Eurozone retail PMIs are out for Germany, France and Italy and they're not great. The Markit purchasing managers' index for the sector in Germany showed that the value of retail sales fell compared to last month. Same for France and Italy. | 9.34am: There's no relief from the grimness this morning. Eurozone retail PMIs are out for Germany, France and Italy and they're not great. The Markit purchasing managers' index for the sector in Germany showed that the value of retail sales fell compared to last month. Same for France and Italy. |
| The retail PMI for the whole eurozone has fallen to 41.3, down from 49.1 in March, and fell at their steepest rate since 2008. A figure below 50 represents contraction. | The retail PMI for the whole eurozone has fallen to 41.3, down from 49.1 in March, and fell at their steepest rate since 2008. A figure below 50 represents contraction. |
| 9.04am: Moving eastwards, the Czech government faces a confidence vote today as it struggles to maintain support amid its own austerity drive. The debate in parliament was due to begin at 9am so it should be underway now. | 9.04am: Moving eastwards, the Czech government faces a confidence vote today as it struggles to maintain support amid its own austerity drive. The debate in parliament was due to begin at 9am so it should be underway now. |
| It is expected to survive the vote but as our Europe editor Ian Traynor pointed out yesterday, if it falls it would be the tenth EU government to go by the wayside in the past two years. | It is expected to survive the vote but as our Europe editor Ian Traynor pointed out yesterday, if it falls it would be the tenth EU government to go by the wayside in the past two years. |
| 8.49am: The Spanish unemployment numbers are really shocking. There are now 5.6 million people out of work, with 1.5 million of those jobless for more than two years. The National Statistics Institute says 365,900 more people lost their jobs in the first three months of the year and that the number of households with every member unemployed rose by 153,400 to 1.7 million. Spain's unemployment rate is the highest in the 17-nation eurozone. | 8.49am: The Spanish unemployment numbers are really shocking. There are now 5.6 million people out of work, with 1.5 million of those jobless for more than two years. The National Statistics Institute says 365,900 more people lost their jobs in the first three months of the year and that the number of households with every member unemployed rose by 153,400 to 1.7 million. Spain's unemployment rate is the highest in the 17-nation eurozone. |
| 8.30am: The markets are taking the downgrade badly. Obviously. The Ibex index in Spain is down around 1.5% as I type while German Dax and French Cac both down around 1%. FTSE has recovered a bit from earlier though - down just 0.23% at 5737. | 8.30am: The markets are taking the downgrade badly. Obviously. The Ibex index in Spain is down around 1.5% as I type while German Dax and French Cac both down around 1%. FTSE has recovered a bit from earlier though - down just 0.23% at 5737. |
| Spain, like many countries before it, is in a bind. If it ramps up the cuts in spending as per the euro austerity drive, there'll be no growth and the markets won't like it. But if it turns it backs on austerity, or merely fudges, which it is doing, the markets don't like that either. | Spain, like many countries before it, is in a bind. If it ramps up the cuts in spending as per the euro austerity drive, there'll be no growth and the markets won't like it. But if it turns it backs on austerity, or merely fudges, which it is doing, the markets don't like that either. |
| 8.10am: I can barely keep up with the news from Spain this morning and I'm afraid it's another bad one. Retail sales fell by 3.7% last month compared with March last year. Sales have now fallen for 21 months in a row. | 8.10am: I can barely keep up with the news from Spain this morning and I'm afraid it's another bad one. Retail sales fell by 3.7% last month compared with March last year. Sales have now fallen for 21 months in a row. |
| While I'm at it, the Spanish bank Banco Popular has just reported its Q1 results and they're bad as well. Profits were down 46% as it covered losses in property investments. More losses will follow in the coming quarters, it said, as it gets to grips with loans dished out during the boom which have now gone sour. | While I'm at it, the Spanish bank Banco Popular has just reported its Q1 results and they're bad as well. Profits were down 46% as it covered losses in property investments. More losses will follow in the coming quarters, it said, as it gets to grips with loans dished out during the boom which have now gone sour. |
| 8.07am: Unemployment in Spain has risen to 24.4% in the first quarter of this year. That's a shocker. The figure was expected to be a percentage point lower at 23.%. | 8.07am: Unemployment in Spain has risen to 24.4% in the first quarter of this year. That's a shocker. The figure was expected to be a percentage point lower at 23.%. |
| It's an increase on 22.9% in the last three months of 2011. | It's an increase on 22.9% in the last three months of 2011. |
| 8.02am: On the markets, the FTSE100 has dropped 0.7% this morning on the back of the Spanish downgrade. British banks are big investors in Spain and they have fallen sharply. Lloyds is the biggest faller on the FTSE100, down nearly 3% this morning. | 8.02am: On the markets, the FTSE100 has dropped 0.7% this morning on the back of the Spanish downgrade. British banks are big investors in Spain and they have fallen sharply. Lloyds is the biggest faller on the FTSE100, down nearly 3% this morning. |
| Spanish bond yields have also spiked back above 6% for benchmark 10-year money. | Spanish bond yields have also spiked back above 6% for benchmark 10-year money. |
| 7.57am: The Spanish finance minister Luis de Guindos has denied that European officials have told Spain to ask for a bailout. | 7.57am: The Spanish finance minister Luis de Guindos has denied that European officials have told Spain to ask for a bailout. |
| He told Bloomberg last night that: "Nobody has asked Spain, either officially or unofficially" to turn to Europe's bailout mechanisms. "We don't need it." | He told Bloomberg last night that: "Nobody has asked Spain, either officially or unofficially" to turn to Europe's bailout mechanisms. "We don't need it." |
| Later that same evening, this happened. | Later that same evening, this happened. |
| 7.45am: Morning and welcome to the eurozone liveblog. Or should that be buenos días because the blog will have a strong Spanish flavour today after last night's S&P downgrade and unemployment figures coming up this morning. | 7.45am: Morning and welcome to the eurozone liveblog. Or should that be buenos días because the blog will have a strong Spanish flavour today after last night's S&P downgrade and unemployment figures coming up this morning. |
| The killer line from S&P is that not only is the economy going to shrink, making it more difficult to get out of the fiscal mess, but Spain will have shell out more money for banks. | The killer line from S&P is that not only is the economy going to shrink, making it more difficult to get out of the fiscal mess, but Spain will have shell out more money for banks. |
| There's a busy agenda for today and here's what to look out for: | There's a busy agenda for today and here's what to look out for: |
| • Spanish job figures at 8am • Joseph Stiglitz says austerity pushing Europe to suicide • Czech government vote of confidence • Italian 5-year bond auction worth up to €6.25bn • Japan pumps another $120bn into the financial system • US GDP at 1.30pm - expected to be 2.5% annualised | • Spanish job figures at 8am • Joseph Stiglitz says austerity pushing Europe to suicide • Czech government vote of confidence • Italian 5-year bond auction worth up to €6.25bn • Japan pumps another $120bn into the financial system • US GDP at 1.30pm - expected to be 2.5% annualised |