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UK inflation falls to zero for first time in decades – live updates UK inflation falls to zero for first time in decades – live updates
(35 minutes later)
12.56pm GMT12:56
Yesterday’s Merkel-Tsipras meeting makes the front pages in Germany too:
#Greece Tsipras-Merkel meeting on the front pages in #Germany pic.twitter.com/1ITRFThwfl
12.55pm GMT12:55
Over in Greece, the media reaction to last night’s meeting between Alexis Tsipras and Angela Merkel is generally positive.
But behind the scenes, some members of Tsipras’s government aren’t happy.
Helena Smith reports from Athens:
Greek newspapers this morning may have seen prime minister Alexis Tsipras’ visit to Berlin as a much-needed ice-breaker – with the government friendly Efimerida ton Syntakton hailing it as a “civil partnership”– but in Athens the battling lines are being drawn within the leader’s Syriza party.
Panagiotis Lafazanis, the energy minister who as head of the party’s militant wing, the Left Platform is effectively the number three in the government, reacted with fury this morning to the prospect of the national electricity company DEH, being privatised.
A united and public DEH was non-negotiable, he says.
“To privatize it would be a catastrophe for the economy,” he said adding that the leftist-led government’s goal was an exit from the crisis by pursuing policies of job-creating growth.
Lafazanis insisted:
“The government is trying to open positive paths for the people so that their income can return to pre-memorandum levels. It’s a titanic quest and it will be achieved whatever the pressures, threats, blackmailing and difficulties.”
The intervention underscored the difficulties the ruling coalition is likely to face when it is forced to vote legislation through parliament.
Speculation in Athens is rising that Tsipras may have to dump his far left comrades and seek backing from other pro-reform parties – but we are a long way off from that yet. HS
12.39pm GMT12:3912.39pm GMT12:39
US inflation rises, to zeroUS inflation rises, to zero
Just in: US inflation was zero on an annual basis last month, matching the UK’s reading this morning.Just in: US inflation was zero on an annual basis last month, matching the UK’s reading this morning.
But in America’s case, that’s actually an increase from the -0.1% CPI recorded in January.But in America’s case, that’s actually an increase from the -0.1% CPI recorded in January.
Headline inflation rate now the same in US and UKHeadline inflation rate now the same in US and UK
Prices increased by 0.2% on a month-on-month basis, reversing a 0.7% tumble in January, as fuel prices picked up.Prices increased by 0.2% on a month-on-month basis, reversing a 0.7% tumble in January, as fuel prices picked up.
And core inflation, which strips out volatile elements, has risen to 1.7%. That suggests inflationary pressures may be increasing - putting a summer interest rate rise back on the agenda, perhaps.And core inflation, which strips out volatile elements, has risen to 1.7%. That suggests inflationary pressures may be increasing - putting a summer interest rate rise back on the agenda, perhaps.
Dollar index shoots higher after that CPI report pic.twitter.com/9MFDvzYmeEDollar index shoots higher after that CPI report pic.twitter.com/9MFDvzYmeE
12.22pm GMT12:2212.22pm GMT12:22
Alexis Tsipras has also visited the Holocaust Memorial in Berlin today, as part of his first visit as Greek prime minister.Alexis Tsipras has also visited the Holocaust Memorial in Berlin today, as part of his first visit as Greek prime minister.
12.13pm GMT12:1312.13pm GMT12:13
The FT’s Gideon Rachman has heard that Germany could provide some financial aid to Greece, in recognition of the horrors of the second world war.The FT’s Gideon Rachman has heard that Germany could provide some financial aid to Greece, in recognition of the horrors of the second world war.
German official tells me reparations to Greece are possible. But must be targeted at communities that suffered, not general govt budgetGerman official tells me reparations to Greece are possible. But must be targeted at communities that suffered, not general govt budget
That may be related to the Future Fund, which was set up last year to address the issue.That may be related to the Future Fund, which was set up last year to address the issue.
12.05pm GMT12:0512.05pm GMT12:05
Greece’s prime minister tweets that he’s met with the leaders of Germany’s left-wing opposition parties, a day after his talks with Angela Merkel.Greece’s prime minister tweets that he’s met with the leaders of Germany’s left-wing opposition parties, a day after his talks with Angela Merkel.
Meeting earlier today in Berlin w/@katjakipping @GregorGysi of @dieLinke @europeanleft #Greece #Syriza pic.twitter.com/j2gNcxoGYwMeeting earlier today in Berlin w/@katjakipping @GregorGysi of @dieLinke @europeanleft #Greece #Syriza pic.twitter.com/j2gNcxoGYw
11.54am GMT11:5411.54am GMT11:54
Germany: Relationship with Greece has improvedGermany: Relationship with Greece has improved
Time to turn back to the Greek debt crisis.Time to turn back to the Greek debt crisis.
And German foreign minister Frank-Walter Steinmeier has told reporters in Berlin that relations between the two counties have improved.And German foreign minister Frank-Walter Steinmeier has told reporters in Berlin that relations between the two counties have improved.
Steinmeier (who has met with Alexis Tsipras today), said:Steinmeier (who has met with Alexis Tsipras today), said:
“I’m pleased that the atmosphere in German-Greek talks in recent days has changed and improved significantly.“I’m pleased that the atmosphere in German-Greek talks in recent days has changed and improved significantly.
And that warming of relations should help “serious talks” begin about Greece’s debts, he added.And that warming of relations should help “serious talks” begin about Greece’s debts, he added.
Meeting earlier today with the German Foreign Minister, Frank-Walter Steinmeier #Greece pic.twitter.com/Q81pbl9yGjMeeting earlier today with the German Foreign Minister, Frank-Walter Steinmeier #Greece pic.twitter.com/Q81pbl9yGj
11.33am GMT11:3311.33am GMT11:33
Read the full story hereRead the full story here
Here’s Angela Monaghan’s news story on UK inflation:Here’s Angela Monaghan’s news story on UK inflation:
Related: UK inflation hits zero for the first time on recordRelated: UK inflation hits zero for the first time on record
And here’s Larry Elliott’s full analysis:And here’s Larry Elliott’s full analysis:
Related: Inflation falls to 0%: what does it mean for the UK economy?Related: Inflation falls to 0%: what does it mean for the UK economy?
Updated at 11.33am GMTUpdated at 11.33am GMT
11.32am GMT11:3211.32am GMT11:32
The TUC is also concerned about the underlying state of the UK economy.The TUC is also concerned about the underlying state of the UK economy.
General secretary Frances O’Grady said:General secretary Frances O’Grady said:
“Zero inflation is a reminder of how fragile the economy remains. Stagnating prices are not a sound foundation for the strong and sustained pay rises that workers have waited so long for.“Zero inflation is a reminder of how fragile the economy remains. Stagnating prices are not a sound foundation for the strong and sustained pay rises that workers have waited so long for.
“With deflation on the horizon, the Chancellor’s plans for extreme cuts after the election look more and more like a suicide note for the UK economy.”“With deflation on the horizon, the Chancellor’s plans for extreme cuts after the election look more and more like a suicide note for the UK economy.”
Worth remembering that the Bank of England’s task is to keep inflation at 2% in the medium-term, not at zero....Worth remembering that the Bank of England’s task is to keep inflation at 2% in the medium-term, not at zero....
11.23am GMT11:2311.23am GMT11:23
With the election just 44 days away, the opposition Labour party isn’t giving the government much credit for Britain’s inflation data.With the election just 44 days away, the opposition Labour party isn’t giving the government much credit for Britain’s inflation data.
Cathy Jamieson MP, Labour’s Shadow Treasury minister, says:Cathy Jamieson MP, Labour’s Shadow Treasury minister, says:
“Inflation is falling around the world because global oil prices have plummeted, yet in Britain wages continue to be sluggish.“Inflation is falling around the world because global oil prices have plummeted, yet in Britain wages continue to be sluggish.
“Working people are £1,600 a year worse off under this government. And another Tory VAT rise if David Cameron wins the election will hit living standards and send prices rising again.“Working people are £1,600 a year worse off under this government. And another Tory VAT rise if David Cameron wins the election will hit living standards and send prices rising again.
“A few months of falling world oil prices won’t solve the deep-seated problems in our economy. We need Labour’s better plan to build a more productive economy so we can earn our way to sustained rises in living standards and so get the deficit down too.”“A few months of falling world oil prices won’t solve the deep-seated problems in our economy. We need Labour’s better plan to build a more productive economy so we can earn our way to sustained rises in living standards and so get the deficit down too.”
Updated at 11.23am GMTUpdated at 11.23am GMT
11.17am GMT11:1711.17am GMT11:17
Some historical context:Some historical context:
Updated at 11.35am GMTUpdated at 11.35am GMT
11.01am GMT11:0111.01am GMT11:01
The prime minister and chancellor shouldn’t be too complacent about the dangers of deflation, argues Ranko Berich, Head of Market Analysis at Monex Europe.The prime minister and chancellor shouldn’t be too complacent about the dangers of deflation, argues Ranko Berich, Head of Market Analysis at Monex Europe.
He points to the fact that price rises have slowed, or started falling, across the economy (see earlier chart).He points to the fact that price rises have slowed, or started falling, across the economy (see earlier chart).
George Osbourne and David Cameron have been quick to write off the ‘noflation’ as purely a symptom of lower fuel prices, pointing to the positive aspects of low inflation for British households.George Osbourne and David Cameron have been quick to write off the ‘noflation’ as purely a symptom of lower fuel prices, pointing to the positive aspects of low inflation for British households.
While this argument certainly has some weight, today’s data also showed year-on-year deflation in five categories, including food, as well as slower price increases across many others. This suggests that the UK could well be succumbing to the wave of low inflation that has swept the eurozone, and a sustained period of deflation remains a key risk.While this argument certainly has some weight, today’s data also showed year-on-year deflation in five categories, including food, as well as slower price increases across many others. This suggests that the UK could well be succumbing to the wave of low inflation that has swept the eurozone, and a sustained period of deflation remains a key risk.
10.54am GMT10:5410.54am GMT10:54
Inflation to fall into negative territoryInflation to fall into negative territory
David Kern, Chief Economist at the British Chambers of Commerce, also predicts that Britain’s inflation rate will fall below zero:David Kern, Chief Economist at the British Chambers of Commerce, also predicts that Britain’s inflation rate will fall below zero:
“These historically low figures reinforce our belief that inflation will fall into slightly negative territory in the coming months, before returning to a positive trend before the end of the year. However, we remain convinced that there is very little risk of a long period of deflation.“These historically low figures reinforce our belief that inflation will fall into slightly negative territory in the coming months, before returning to a positive trend before the end of the year. However, we remain convinced that there is very little risk of a long period of deflation.
“Inflation in the service sector, which accounts for 80% of the UK economy, remains firmly above the government’s 2.0% target, and core CPI inflation in February was 1.2%. Together with higher earnings, lower inflation is boosting people’s spending power, and will contribute to economic growth in the year ahead.“Inflation in the service sector, which accounts for 80% of the UK economy, remains firmly above the government’s 2.0% target, and core CPI inflation in February was 1.2%. Together with higher earnings, lower inflation is boosting people’s spending power, and will contribute to economic growth in the year ahead.
“To sustain business confidence we need a firm commitment from the MPC to keep interest rates on hold until at least early 2016.”“To sustain business confidence we need a firm commitment from the MPC to keep interest rates on hold until at least early 2016.”
Here's a chart showing CPI inflation over the last 10 years . It hit a record low of zero in February. pic.twitter.com/94fLg0PmrlHere's a chart showing CPI inflation over the last 10 years . It hit a record low of zero in February. pic.twitter.com/94fLg0Pmrl
10.48am GMT10:4810.48am GMT10:48
Danielle Haralambous, UK analyst at the Economist Intelligence Unit, agrees that we should welcome this period of no-flation.Danielle Haralambous, UK analyst at the Economist Intelligence Unit, agrees that we should welcome this period of no-flation.
“The likelihood that we are on the verge of a period of deep and prolonged deflation in the UK remains slim.“The likelihood that we are on the verge of a period of deep and prolonged deflation in the UK remains slim.
Recent deviations in inflation from target have been largely driven by lower food and energy costs, which will provide a welcome boost to real household incomes and support prospects for the demand-driven recovery.”Recent deviations in inflation from target have been largely driven by lower food and energy costs, which will provide a welcome boost to real household incomes and support prospects for the demand-driven recovery.”
10.46am GMT10:4610.46am GMT10:46
Spot the pattern:Spot the pattern:
The CPI figures: it is not just energy, IMHO. Everything appears to be <2% pic.twitter.com/rwLZtIGYnQThe CPI figures: it is not just energy, IMHO. Everything appears to be <2% pic.twitter.com/rwLZtIGYnQ
10.44am GMT10:4410.44am GMT10:44
A wider measure of inflation, the retail prices index, also fell last month.A wider measure of inflation, the retail prices index, also fell last month.
But unlike CPI, RPI showed that prices rose by around 1.0% annually. That’s the lowest since November 2009.But unlike CPI, RPI showed that prices rose by around 1.0% annually. That’s the lowest since November 2009.
Updated at 10.46am GMTUpdated at 10.46am GMT
10.26am GMT10:2610.26am GMT10:26
FTSE 100 hits record high, but pound weakensFTSE 100 hits record high, but pound weakens
The drop in inflation has driven the London stock market to a new record high.The drop in inflation has driven the London stock market to a new record high.
The FTSE index has jumped by another 24 points, or 0.35%, to 7062.The FTSE index has jumped by another 24 points, or 0.35%, to 7062.
The pound has weakened, hitting a one-month low against the euro at €1.36, down from €1.365 yesterday.The pound has weakened, hitting a one-month low against the euro at €1.36, down from €1.365 yesterday.
Both moves show that traders believe UK monetary policy will remain extremely loose for some time. Last week, indeed, the Bank of England’s chief economist Andy Haldane suggested that an interest rate cut is as likely as a rise.Both moves show that traders believe UK monetary policy will remain extremely loose for some time. Last week, indeed, the Bank of England’s chief economist Andy Haldane suggested that an interest rate cut is as likely as a rise.
Related: Interest rates may be cut, suggests Bank of England chief economistRelated: Interest rates may be cut, suggests Bank of England chief economist
10.15am GMT10:1510.15am GMT10:15
The elimination of inflation, however temporarily, is simply good news for the UK, argues Rob Wood of Berenberg Bank:The elimination of inflation, however temporarily, is simply good news for the UK, argues Rob Wood of Berenberg Bank:
Cheaper imports, petrol and food are unmitigated good news for consumers and growth, which shows up in high consumer confidence.....Cheaper imports, petrol and food are unmitigated good news for consumers and growth, which shows up in high consumer confidence.....
He reckons there’s little danger of Britain suffering full-blown deflation - a protracted period of falling prices, when people are reluctant to spend.He reckons there’s little danger of Britain suffering full-blown deflation - a protracted period of falling prices, when people are reluctant to spend.
The UK can sit back and enjoy the purchasing power boost that low inflation today is bringing without fearing any of the sillier claims of what ‘deflation’ might bring, like households delaying purchases on the expectation that prices will be even lower tomorrow.The UK can sit back and enjoy the purchasing power boost that low inflation today is bringing without fearing any of the sillier claims of what ‘deflation’ might bring, like households delaying purchases on the expectation that prices will be even lower tomorrow.
10.11am GMT10:1110.11am GMT10:11
Larry Elliott: What zero inflation means for youLarry Elliott: What zero inflation means for you
The drop in inflation to zero means that living standards are going up, and interest rates are going nowhere soon. And it may mean that pay rises will be less generous.The drop in inflation to zero means that living standards are going up, and interest rates are going nowhere soon. And it may mean that pay rises will be less generous.
Our economics editor Larry Elliott explains:Our economics editor Larry Elliott explains:
Britain is on the cusp of a period of deflation. It is the first time on record that inflation, measured by the consumer prices index, has hit zero, since the measure was created in 1989. This has three implications, two of them obvious, one less easy to assess.Britain is on the cusp of a period of deflation. It is the first time on record that inflation, measured by the consumer prices index, has hit zero, since the measure was created in 1989. This has three implications, two of them obvious, one less easy to assess.
The first is that living standards will rise. Average earnings are growing by just less than 2% a year, so with prices not rising at all people will find their wages and salaries go further.The first is that living standards will rise. Average earnings are growing by just less than 2% a year, so with prices not rising at all people will find their wages and salaries go further.
The second implication is that there is likely to be a further delay before the Bank of England raises interest rates. The latest fall in inflation came as no surprise to Threadneedle Street but its nine-strong monetary policy committee is going to be in no hurry to raise the cost of borrowing.The second implication is that there is likely to be a further delay before the Bank of England raises interest rates. The latest fall in inflation came as no surprise to Threadneedle Street but its nine-strong monetary policy committee is going to be in no hurry to raise the cost of borrowing.
That’s because it will want to see what zero inflation does to wage bargaining. At the moment, it is assumed that the fall in the cost of living is temporary and that inflation will pick up later this year. But it would be a different story if low inflation led to less generous pay settlements. If that were to happen, deflation could become tough to shift, as has been the case in Japan.That’s because it will want to see what zero inflation does to wage bargaining. At the moment, it is assumed that the fall in the cost of living is temporary and that inflation will pick up later this year. But it would be a different story if low inflation led to less generous pay settlements. If that were to happen, deflation could become tough to shift, as has been the case in Japan.
10.06am GMT10:0610.06am GMT10:06
“We are looking for a couple of months of deflation in the UK”, predicts Jeremy Cook, chief economist at the international payments company, World First.“We are looking for a couple of months of deflation in the UK”, predicts Jeremy Cook, chief economist at the international payments company, World First.
10.03am GMT10:0310.03am GMT10:03
Enjoy no-flation while you can.Enjoy no-flation while you can.
The CBI’s director of economics, Rain Newton-Smith, reckons it’s a temporary situation:The CBI’s director of economics, Rain Newton-Smith, reckons it’s a temporary situation:
“Despite inflation dropping to zero, it is unlikely we will see falling prices for a prolonged period, particularly as the pressure from lower oil prices fades.“Despite inflation dropping to zero, it is unlikely we will see falling prices for a prolonged period, particularly as the pressure from lower oil prices fades.
There’s little chance of the Bank of England raising interest rates anytime soon, Newton-Smith adds.There’s little chance of the Bank of England raising interest rates anytime soon, Newton-Smith adds.
9.57am GMT09:579.57am GMT09:57
Chancellor George Osborne gives some of the credit to the falling oil price.....Chancellor George Osborne gives some of the credit to the falling oil price.....
Inflation at zero is a first for the British economy. Low inflation due to falling oil prices is good news for family budgetsInflation at zero is a first for the British economy. Low inflation due to falling oil prices is good news for family budgets
...before following up with another of his witty puns....before following up with another of his witty puns.
Prices are frozen & as the recovery from Labour's Great Recession strengthens, their economic argument has literally come to noughtPrices are frozen & as the recovery from Labour's Great Recession strengthens, their economic argument has literally come to nought
9.54am GMT09:549.54am GMT09:54
Cameron: It's good news for families Cameron: Zero inflation is good news for families
The drop in inflation means that real incomes in the UK continues to rise, after declining for several years.The drop in inflation means that real incomes in the UK continues to rise, after declining for several years.
British pay packets are rising by 1.8% annually (or 1.6% excluding bonuses) according to the latest data. So with inflation at zero, so are real incomes.British pay packets are rising by 1.8% annually (or 1.6% excluding bonuses) according to the latest data. So with inflation at zero, so are real incomes.
The prime minister has leapt on the news:The prime minister has leapt on the news:
Inflation is running at 0% - the lowest on record. It's good news for family budgets and a sign our long term plan is working.Inflation is running at 0% - the lowest on record. It's good news for family budgets and a sign our long term plan is working.
Updated at 9.59am GMT Updated at 12.52pm GMT
9.47am GMT09:479.47am GMT09:47
Economists reckon that the UK is now heading into a period of negative inflation:Economists reckon that the UK is now heading into a period of negative inflation:
Inflation at 0%. But it's not so much the level as the trajectory that's striking. #noflation pic.twitter.com/I6eIZuEjLTInflation at 0%. But it's not so much the level as the trajectory that's striking. #noflation pic.twitter.com/I6eIZuEjLT
Zero inflation in February is lower than the markets expected and virtually guarantees a period of temporary deflation in coming months.Zero inflation in February is lower than the markets expected and virtually guarantees a period of temporary deflation in coming months.
9.43am GMT09:439.43am GMT09:43
Inflation: the key chartsInflation: the key charts
This table confirms that food and transport costs dragged inflation down to zero:This table confirms that food and transport costs dragged inflation down to zero:
And this chart is a reminder that inflation spent most of the last seven years above the official target of 2%, before its recent slide:And this chart is a reminder that inflation spent most of the last seven years above the official target of 2%, before its recent slide:
Updated at 9.44am GMTUpdated at 9.44am GMT
9.41am GMT09:419.41am GMT09:41
The last time UK CPI was this low, Lonnie Donegan was number 1 with "My Old Man's a Dustman". March 1960.The last time UK CPI was this low, Lonnie Donegan was number 1 with "My Old Man's a Dustman". March 1960.
9.39am GMT09:399.39am GMT09:39
This is the first time on record that the consumer prices index has hit zero, according to figures going back to 1989.This is the first time on record that the consumer prices index has hit zero, according to figures going back to 1989.
The ONS suggest that inflation may have been lower in 1960, though, according to Reuters.The ONS suggest that inflation may have been lower in 1960, though, according to Reuters.
Updated at 11.36am GMTUpdated at 11.36am GMT
9.38am GMT09:389.38am GMT09:38
UK food prices fall 3.4%UK food prices fall 3.4%
The drop in inflation was caused by a big drop in food prices, which fell by 3.4% in the year to February.The drop in inflation was caused by a big drop in food prices, which fell by 3.4% in the year to February.
Motor fuels tumbled by 16.6%, due to the sharp fall in oil prices in recent months.Motor fuels tumbled by 16.6%, due to the sharp fall in oil prices in recent months.
The Office for National Statistics also attributes the fall to:The Office for National Statistics also attributes the fall to:
“price movements for a range of recreational goods (particularly data processing equipment, books and games, toys & hobbies), food and furniture & furnishings.”“price movements for a range of recreational goods (particularly data processing equipment, books and games, toys & hobbies), food and furniture & furnishings.”
9.34am GMT09:349.34am GMT09:34
This is a bigger fall in inflation than expected.This is a bigger fall in inflation than expected.
Economists had predicted that the consumer prices index would slide to just 0.1% in February, down from 0.3% in January. But instead, CPI has come in at exactly zero.Economists had predicted that the consumer prices index would slide to just 0.1% in February, down from 0.3% in January. But instead, CPI has come in at exactly zero.
9.30am GMT09:309.30am GMT09:30
UK inflation falls to 0.0%UK inflation falls to 0.0%
Breaking: The UK inflation rate has fallen to zero for the first time on record.Breaking: The UK inflation rate has fallen to zero for the first time on record.
More to follow.....More to follow.....
9.25am GMT09:259.25am GMT09:25
France is lagging behind the rest of the eurozone for job creation, and output growth, according to Markit’s new PMI survey.France is lagging behind the rest of the eurozone for job creation, and output growth, according to Markit’s new PMI survey.
9.21am GMT09:219.21am GMT09:21
Eurozone recovery: what the experts sayEurozone recovery: what the experts say
Economists are cheering the news that the eurozone private sector is growing at the fastest rate since May 2011:Economists are cheering the news that the eurozone private sector is growing at the fastest rate since May 2011:
Strong PMIs in Eurozone and Germany indicate that QE is working.Strong PMIs in Eurozone and Germany indicate that QE is working.
CHART: Euro-area Q1 #PMI suggest fastest growth in 15 quarters. New orders/stock ratio highlights recovery momentum. pic.twitter.com/npQJaVcz03CHART: Euro-area Q1 #PMI suggest fastest growth in 15 quarters. New orders/stock ratio highlights recovery momentum. pic.twitter.com/npQJaVcz03
FYI, today's decent #Eurozone #PMI and solid #Germany data point to beneficial combined impact of weaker #oil ,depreciated #Euro & @ECB #QEFYI, today's decent #Eurozone #PMI and solid #Germany data point to beneficial combined impact of weaker #oil ,depreciated #Euro & @ECB #QE
9.12am GMT09:129.12am GMT09:12
Eurozone private sector growth hits near four-year highEurozone private sector growth hits near four-year high
The eurozone recovery is alive and well.The eurozone recovery is alive and well.
Firms across the euro are growing much faster than expected this month, according to Markit’s latest survey of the sector.Firms across the euro are growing much faster than expected this month, according to Markit’s latest survey of the sector.
The eurozone composite PMI, just released, smashed expectations by jumping to 54.1 this month, up from 53.6 in February. That’s the highest reading since May 2011, driven by a recovery in the service sector.The eurozone composite PMI, just released, smashed expectations by jumping to 54.1 this month, up from 53.6 in February. That’s the highest reading since May 2011, driven by a recovery in the service sector.
As mentioned earlier in the blog, Germany is growing at its fastest rate for 10 months, while growth in France eased back.As mentioned earlier in the blog, Germany is growing at its fastest rate for 10 months, while growth in France eased back.
But importantly, the rest of the eurozone is enjoying strong growth; new order growth and job creation was both the strongest since mid-2007.But importantly, the rest of the eurozone is enjoying strong growth; new order growth and job creation was both the strongest since mid-2007.
It suggests the eurozone economy is picking up pace, and should get another boost from the European Central Bank’s new quantitative easing programme.It suggests the eurozone economy is picking up pace, and should get another boost from the European Central Bank’s new quantitative easing programme.
Chris Williamson, chief economist at Markit said:Chris Williamson, chief economist at Markit said:
“The eurozone’s economic recovery gained further momentum in March, with the PMI hitting its highest for almost four years. The improvement provides welcome news to a region awaiting signs that the ECB’s quantitative easing is stimulating the real economy.“The eurozone’s economic recovery gained further momentum in March, with the PMI hitting its highest for almost four years. The improvement provides welcome news to a region awaiting signs that the ECB’s quantitative easing is stimulating the real economy.
Deflationary pressures ‘eased’ this month, Williamson says, suggesting the eurozone will avoid a deep deflationary spiral. He adds:Deflationary pressures ‘eased’ this month, Williamson says, suggesting the eurozone will avoid a deep deflationary spiral. He adds:
The survey data therefore indicate that the ECB’s quantitative easing has been started at a time when the eurozone’s economic upturn is already starting to gain traction. This augurs well for the region to enjoy further improvements in business conditions as the year proceeds, helping drive greater business investment and hiring, and thereby ensuring that the recovery becomes sustainable.The survey data therefore indicate that the ECB’s quantitative easing has been started at a time when the eurozone’s economic upturn is already starting to gain traction. This augurs well for the region to enjoy further improvements in business conditions as the year proceeds, helping drive greater business investment and hiring, and thereby ensuring that the recovery becomes sustainable.
Eurozone PMI data better then expected. ThanQE DraghiEurozone PMI data better then expected. ThanQE Draghi
Updated at 9.14am GMTUpdated at 9.14am GMT
8.43am GMT08:438.43am GMT08:43
The euro has jumped half a cent against the US dollar on the back of the news that the German economy is accelerating.The euro has jumped half a cent against the US dollar on the back of the news that the German economy is accelerating.
#Euro nudges to fresh day high $1.0998 after upbeat German PMIs. German Mar Composite PMI Flash 55.3 vs 55.0 expected pic.twitter.com/GIdS4b3QyE#Euro nudges to fresh day high $1.0998 after upbeat German PMIs. German Mar Composite PMI Flash 55.3 vs 55.0 expected pic.twitter.com/GIdS4b3QyE
Not that it’s a huge shock.Not that it’s a huge shock.
Very strong German composite PMI. Don't act as you're surprised.Very strong German composite PMI. Don't act as you're surprised.
8.41am GMT08:418.41am GMT08:41
Strong economic data from Germany - its private sector is growing at the fastest rate in eight months.Strong economic data from Germany - its private sector is growing at the fastest rate in eight months.
The German composite PMI has risen to 55.3, from 53.8 in February - meaning 23 months of consecutive growth. Manufacturing and services both grew at a faster rate.The German composite PMI has risen to 55.3, from 53.8 in February - meaning 23 months of consecutive growth. Manufacturing and services both grew at a faster rate.
Germany is entering the “domestic fast lane again”, says Markit economist Oliver Kolodseike.Germany is entering the “domestic fast lane again”, says Markit economist Oliver Kolodseike.
The composite #PMI of #Germany rises to 55.3 proving that it's economy is in rude health and does not need #ECB #QEThe composite #PMI of #Germany rises to 55.3 proving that it's economy is in rude health and does not need #ECB #QE
Updated at 8.42am GMTUpdated at 8.42am GMT
8.25am GMT08:258.25am GMT08:25
Hopes that France’s economy was recovering have just taken a knock.Hopes that France’s economy was recovering have just taken a knock.
Markit’s monthly healthcheck of the sector shows that growth in France’s private sector slowed this month.Markit’s monthly healthcheck of the sector shows that growth in France’s private sector slowed this month.
The French composite PMI fell to 51.7 this month, down from 52.2 in February [where any reading over 50 = growth]. Service sector expansion slowed, while factory output continued to fall.The French composite PMI fell to 51.7 this month, down from 52.2 in February [where any reading over 50 = growth]. Service sector expansion slowed, while factory output continued to fall.
The data implies a ‘modest’ rise in GDP this quarter, Markit says.The data implies a ‘modest’ rise in GDP this quarter, Markit says.
CHART: France struggling to catch euro-area recovery wave as March #PMI disappoint. Still, growth accelerated in Q1. pic.twitter.com/IF05nBkTdACHART: France struggling to catch euro-area recovery wave as March #PMI disappoint. Still, growth accelerated in Q1. pic.twitter.com/IF05nBkTdA
8.21am GMT08:218.21am GMT08:21
Soros: 50% chance Greece will quit the euroSoros: 50% chance Greece will quit the euro
Billionaire philanthropist George Soros has declared there’s a 50:50 chance that Greece will leave the eurozone, due to the mistakes of the past.Billionaire philanthropist George Soros has declared there’s a 50:50 chance that Greece will leave the eurozone, due to the mistakes of the past.
Soros made the comments in an interview with Bloomberg, being broadcast later today.Soros made the comments in an interview with Bloomberg, being broadcast later today.
In it, he warned that:In it, he warned that:
“It’s now a lose-lose game and the best that can happen is actually muddling through....Greece is a long-festering problem that was mishandled from the beginning by all parties.”“It’s now a lose-lose game and the best that can happen is actually muddling through....Greece is a long-festering problem that was mishandled from the beginning by all parties.”
The 84-year old, who famously beat the Bank of England on Black Wednesday, also said that the deadlock between Greece and its creditors is hurting its economy badly. As a result, “Greece is going down the drain.”The 84-year old, who famously beat the Bank of England on Black Wednesday, also said that the deadlock between Greece and its creditors is hurting its economy badly. As a result, “Greece is going down the drain.”
More details here: Soros Says Greece Is Now ‘Lose-Lose Game’ After Being MishandledMore details here: Soros Says Greece Is Now ‘Lose-Lose Game’ After Being Mishandled
8.12am GMT08:128.12am GMT08:12
Greece’s three-year government bonds are strengthening, a little, on the back of today’s comments from Athens, and from Martin Schulz:Greece’s three-year government bonds are strengthening, a little, on the back of today’s comments from Athens, and from Martin Schulz:
#Greece's yields drop as EU's Schulz sees deal with #eurozone likely this week. http://t.co/8m2gsl6YDh pic.twitter.com/XiXoBTvVdD#Greece's yields drop as EU's Schulz sees deal with #eurozone likely this week. http://t.co/8m2gsl6YDh pic.twitter.com/XiXoBTvVdD
Yields are still very high, around 21%, implying a high risk of default.Yields are still very high, around 21%, implying a high risk of default.
Updated at 8.13am GMTUpdated at 8.13am GMT
8.07am GMT08:078.07am GMT08:07
Schulz: Deal could come this weekSchulz: Deal could come this week
Another optimistic sign - European Parliament chief Martin Schulz has predicted that Greece and its creditors could secure a breakthrough this week.Another optimistic sign - European Parliament chief Martin Schulz has predicted that Greece and its creditors could secure a breakthrough this week.
He told Italy’s La Repubblica that:He told Italy’s La Repubblica that:
“I think by the end of this week a new deal will be reached that should be sufficient to release the most urgent financing,”“I think by the end of this week a new deal will be reached that should be sufficient to release the most urgent financing,”
Greece would then have “not more than three months” to present a “credible, detailed and definitive” plan, Schulz added.Greece would then have “not more than three months” to present a “credible, detailed and definitive” plan, Schulz added.
That makes sense; Greece’s current bailout extension runs until the end of June.That makes sense; Greece’s current bailout extension runs until the end of June.
7.58am GMT07:587.58am GMT07:58
Alexis Tsipras is still in Berlin, and due to meet with the leaders of Germany’s opposition Left and Green parties.Alexis Tsipras is still in Berlin, and due to meet with the leaders of Germany’s opposition Left and Green parties.
7.58am GMT07:587.58am GMT07:58
Germany’s Deutsche Welle newspaper reports that Angela Merkel and Alexis Tsipras spoke until almost midnight about the situation in Europe, at their ‘working dinner’Germany’s Deutsche Welle newspaper reports that Angela Merkel and Alexis Tsipras spoke until almost midnight about the situation in Europe, at their ‘working dinner’
Chancellor Merkel’s spokesman Steffen Seibert told reporters late last night that:Chancellor Merkel’s spokesman Steffen Seibert told reporters late last night that:
“The chancellor and the Greek prime minister had a comprehensive discussion in a good and constructive atmosphere about the situation in Greece, the procedures of the European Union and future German-Greek cooperation,”“The chancellor and the Greek prime minister had a comprehensive discussion in a good and constructive atmosphere about the situation in Greece, the procedures of the European Union and future German-Greek cooperation,”
7.43am GMT07:437.43am GMT07:43
Greece: We'll present reform package by MondayGreece: We'll present reform package by Monday
News from Athens: Greece will present a new reform programme to its creditors by next Monday, potentially unlocking bailout funds and averting the risk of bankruptcy.News from Athens: Greece will present a new reform programme to its creditors by next Monday, potentially unlocking bailout funds and averting the risk of bankruptcy.
The news comes less than 12 hours after prime minister Alexis Tsipras and Angela Merkel ended their talks in Berlin.The news comes less than 12 hours after prime minister Alexis Tsipras and Angela Merkel ended their talks in Berlin.
Reuters has the details:Reuters has the details:
Greece will present its proposed package of reforms to its euro zone partners by next Monday in hopes they will release much needed cash, its government spokesman said on Tuesday.Greece will present its proposed package of reforms to its euro zone partners by next Monday in hopes they will release much needed cash, its government spokesman said on Tuesday.
“It will be done at the latest by Monday,” government spokesman Gabriel Sakellaridis told Mega TV.“It will be done at the latest by Monday,” government spokesman Gabriel Sakellaridis told Mega TV.
Greek Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel in Berlin on Monday but it was unclear if they had narrowed differences on economic reforms Athens must implement to win urgently to get fresh aid from its creditors.Greek Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel in Berlin on Monday but it was unclear if they had narrowed differences on economic reforms Athens must implement to win urgently to get fresh aid from its creditors.
Sakellaridis said the package of reforms Athens will propose will not contain recessionary measures but structural changes.Sakellaridis said the package of reforms Athens will propose will not contain recessionary measures but structural changes.
He said Tsipras and Merkel on Monday discussed the outline of the reforms but did not go into depth.He said Tsipras and Merkel on Monday discussed the outline of the reforms but did not go into depth.
“I believe points of convergence were found,” Sakellaridis said.“I believe points of convergence were found,” Sakellaridis said.
Time is short; on April 9th , Greece must repay €467m to the International Monetary Fund.Time is short; on April 9th , Greece must repay €467m to the International Monetary Fund.
If it does convince its creditors next week, then they could unlock some of the €7.2bn bailout tranche which is being withheld.If it does convince its creditors next week, then they could unlock some of the €7.2bn bailout tranche which is being withheld.
This could call for another crunch meeting in Brussels.....This could call for another crunch meeting in Brussels.....
Greece plans present its proposed package of reforms to the eurogroup on Monday. So, see everyone in Brussels for a late night Tuesday? Mon?Greece plans present its proposed package of reforms to the eurogroup on Monday. So, see everyone in Brussels for a late night Tuesday? Mon?
7.37am GMT07:377.37am GMT07:37
The Agenda: Greek developments and UK falling inflationThe Agenda: Greek developments and UK falling inflation
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we’ll be assessing the situation in Greece after yesterday’s visit by Alexis Tsipras to meet Angela Merkel.Today we’ll be assessing the situation in Greece after yesterday’s visit by Alexis Tsipras to meet Angela Merkel.
The two leaders struck a fairly conciliatory tone during last night’s press conference [even though Tsipras mentioned the war reparations], but there’s no sign yet of a breakthrough deal to unlock fresh funds for Greece.The two leaders struck a fairly conciliatory tone during last night’s press conference [even though Tsipras mentioned the war reparations], but there’s no sign yet of a breakthrough deal to unlock fresh funds for Greece.
In the UK, we get the latest inflation data at 9.30am – and economists reckon it could fall to just 0.1% as low energy costs ripple through the economy.In the UK, we get the latest inflation data at 9.30am – and economists reckon it could fall to just 0.1% as low energy costs ripple through the economy.
On the economic side, the latest PMI surveys are being released this morning (from 8am to 9am GMT) They are expected to show the eurozone’s manufacturing and service sectors continuing to expand this month as the slow recovery continues.On the economic side, the latest PMI surveys are being released this morning (from 8am to 9am GMT) They are expected to show the eurozone’s manufacturing and service sectors continuing to expand this month as the slow recovery continues.
We’ve already had downbeat news from China -- its factory activity has fallen to an 11-month low, suggesting its economy is slowing down. More stimulus could be needed....We’ve already had downbeat news from China -- its factory activity has fallen to an 11-month low, suggesting its economy is slowing down. More stimulus could be needed....
China HSBC PMI 49.2 adds to jan/feb soft data. Suggests gdp below 7pct. Ditto Q2, and of course, rate and RRR cuts soon, infra sp laterChina HSBC PMI 49.2 adds to jan/feb soft data. Suggests gdp below 7pct. Ditto Q2, and of course, rate and RRR cuts soon, infra sp later
European stock markets are expected to dip this morning.European stock markets are expected to dip this morning.
Our European opening calls: $FTSE 7021 down 16 $DAX 11863 down 33 $CAC 5042 down 12 $IBEX 11446 down 7 $MIB 23049 down 8Our European opening calls: $FTSE 7021 down 16 $DAX 11863 down 33 $CAC 5042 down 12 $IBEX 11446 down 7 $MIB 23049 down 8
I’ll be tracking all the main events through the day....I’ll be tracking all the main events through the day....
Updated at 7.43am GMTUpdated at 7.43am GMT