Latest: ex-Anglo bankers avoid jail
Can UK banks handle house price crash and new recession?
UK economy grew by 0.8% in Q1 - details start here
Osborne: foundations for broad-based recovery in place
5.20pm BST
And here's a photo of the moment the two Anglo Irish executives left court this afternoon:
4.52pm BST
And here's Henry McDonald, our Ireland Correspondent, on the news that the Anglo Irish execs convicted of illegal lending in the run-up to Ireland's financial crash will definitely not be imprisoned:
The Irish State has lost the battle to jail bankers blamed for the biggest financial collapse in the country's history which nearly bankrupted the entire Republic.
A judge at the Anglo Irish Bank trial ruled on Tuesday afternoon that it would be unjust to imprison two senior executives at the now defunct institution even the pair were found guilty of illegally lending tens of millions of euros to ten rich investors just months before it went bankrupt.
4.41pm BST
Today's court ruling means no Irish banker has yet been jailed over the events that brought its financial system crashing down and forced Ireland to take a 90bn bailout.
Here's some instant reaction:
#Anglo investigation took bones of 6 years, cost millions and no jail time. Our corporate crime strategy is lacking from the very start
@TomLyonsBiz: Some result at the Anglo trial - damning indictment of the financial regulator. Tom will tell us more on @lstwrd at 4.30.
What does an Irish banker have to do in order to be thrown in prison? The answer remains a mystery. http://t.co/9paLE4DZGo
4.36pm BST
The two former executives of Anglo Irish bank have now left the court, after hearing that they'll not be jailed:
Ex Anglo director Patrick Whelan exits the courts: pic.twitter.com/8h4Or97oLk
Willie McAteer and pat Whelan have both left the court in silence after being told they won't be jailed for #anglo loans @IrishMirror
4.23pm BST
Breaking: The two bankers convicted over the collapse of Anglo Irish Bank have avoided being jailed.
Patrick Whelan and William McAteer, who could have received five year's imprisonment each, were told this afternoon that they will serve community service instead.
The Judge at the Anglo Irish Bank trial has ruled that two defendants found guilty of illegal lending to ten investors should not go to jail.
"It would be incredibly unjust to impose custodial sentences.
"I find it incredible that red lights did not go off somewhere in the Regulators office.
Judge Nolan said it was unjust to sent the men to jail when a State agency, the Financial Regulator, led them into error and legality #Anglo
"I feel Mr McAteer and Mr Whelan are not deserving of prison sentences" says #anglotrial judge
3.32pm BST
The spread between UK and German government bond yields has hit its highest level since autumn 1998.
3.19pm BST
MOODY'S SEES GREECE REAL GDP GROWTH 0.3% IN 2014, 1.2% IN 2015
3.13pm BST
Another sign that Greece's economy is, slowly, inching back to normality. Moody's has raised its outlook on the Greek banking sector to stable, from negative.
After some very unstable years, Moody's sees Greek GDP rising by 0.3% this year -- meaning the six-year recession would finally be over - driven by tourism and exports.
Correct timing by Moody's. Today Eurobank was successfully recapitalized &reprivatized. The last of #Greece's systemic banks to exit bailout
#crisiswhatcrisis RT @chrisadamsmkts: Moody's changes outlook on Greece's banking system to stable from negative
2.12pm BST
In the eurozone, the German inflation rate rose to 1.1% annually this month, up from the 0.9% in March.
That suggests that the euro area inflation rate will pick up from the record low of 0.5% hit last month, when it is announced tomorrow.
1.53pm BST
Here's Jill's full story on the UK bank stress tests:
1.26pm BST
Interesting developments at Barclays -- Skip McGee, the boss of Barclays Americas, is stepping down.
McGee, who ran Lehman Brothers' investment arm (before Barclays snapped it up in the dramatic days of Autumn 2008), will leave the bank tomorrow.
What the hell us up with the names at Barclays? Diamond,Rich & Gold RT @bySamRo BARCLAYS AMERICAS CEO MCGEE TO STEP DOWN;GOLD TO REPLACE HIM
12.57pm BST
The bleak scenario outlined in today's Bank of England stress tests has only been matched once in recent UK history, after the First World War, says our City editor Jill Treanor.
From the Bank, she writes:
The Bank of England is to subject the UKs biggest banks and building societies to a series of stringent tests to see if they are strong enough to withstand the shock of a 35% crash in house prices, along with a jump in interest rates to 4% and soaring unemployment.
Policymakers in Threadneedle Street will stress-test the UKs eight largest financial firms with a set of hypothetical scenarios over a three year period between 2014 and 2016. The exercise will assume that house prices fall back to levels last seen in 2002, unemployment would soar to 12% and interest rates jump from their record low of 0.5% to 4%.
12.57pm BST
Details of the stress tests are online on the Bank's website.
12.55pm BST
Mark Carney, Governor of the Bank of England, insists that it's "highly unlikely" that Britain will suffer the toxic mix of blows outlined in today's stress tests (so that's a relief).
It's vital, though, that the banks are strong enough to support the recovery, rather than being first in the queue for help when the economy sours.
Although the events depicted in this stress-test scenario are extreme, and thus highly unlikely to transpire, by bringing together the microprudential standards for banks with a macroprudential assessment of the tail risks to which they must be resilient, the Bank is working to ensure that the UK financial system remains one that absorbs rather than amplifies shocks.
12.38pm BST
Breaking: Britain's biggest banks must show that they have the resources to cope with a massive house price crash, a collapse in the value of sterling, a surge in unemployment and another deep recession.
The Bank of England has released details of the stress tests that Britain's eight biggest banks must pass to show they are resilient enough to survive another crisis.
12.25pm BST
Over in parliament, George Osborne is in good spirits at Treasury questions.
George Osborne: "The ONLY thing Ed Balls can say is 'Why aren't you cleaning up Labour's mess more quickly!'" #TreasuryQs
12.00pm BST
Chris Giles, the FT's economics editor, has tweeted a graph suggesting that UK production sector won't hit its pre-crisis peak until early 2019!
Construction output should hit this milestone at the end of 2016 (assuming current trends continues, of course....)
Services above 2008 peak. Total economy soon there. On recent trends, production and construction some way to go pic.twitter.com/X71wswNjZI
11.49am BST
Geraint Johnes, director at The Work Foundation, says the 1.3% rise in UK manufacturing output last quarter suggests that the economy is both recovering and rebalancing.
But he also warns Britain still suffers from an 'underemployment' problem .
Manufacturing grew by 1.3% over the quarter, and by 3.5% over the year. This is clearly good news in that it addresses concerns that the UK had, before the recession, become over-reliant on services.
The evidence that this recovery is spatially uneven suggests that the very encouraging aggregate statistics may serve to conceal what is, in reality, a much more nuanced picture.
11.24am BST
Unless Britain suffers a very nasty shock imminently, the nation's economy should finally climb above its pre-crisis peak by the summer (last quarter's growth means it's just 0.6% away)
The Treasury will be getting the bunting ready, and the PM will probably tweet about the #LongTermEconomicPlan succeeding. It's a welcome milestone, especially with the main sectors fo the economy all growing.
It has, in all honesty, been a long time coming. The recession was deep and the recovery until the last 12 months painfully slow. Slower even than after the Great Depression of the 1930s.
But there is now growth across virtually the whole economy. Most of the expansion between January and March was accounted for by services, in part because services make up almost four fifths of the economy and in part because parts of the service sector housing, retailing, business services all performed strongly. Construction was a tad weaker than expected, with the 0.3% growth perhaps suggesting that increased demand for property has yet to feed through into higher house building
11.06am BST
This chart reinforces the point that Britain's service sector has outperformed the rest of the economy since the great recession.
10.58am BST
The CBI is optimistic about UK growth prospects this year, reckoning that businesses and consumers are growing in confidence:
Katja Hall, CBI chief policy director, said:
Growth in the first quarter was mostly driven by the service sector [see here], but were also seeing our industrial base playing an important role in the recovery, with manufacturing output rising steadily.
We expect economic momentum to be maintained throughout the year with a broader-based recovery as business investment takes off.
10.54am BST
Shadow chancellor Ed Balls just appeared on BBC News 24, warning that many people in Britain are not feeling the benefits in the recovery.
Now that growth has finally returned, the question is whether ordinary working people will properly feel the benefit and we have a balanced recovery thats built to last.
David Cameron and George Osborne want to tell people the cost-of-living crisis is over, but millions of hardworking people are still feeling no recovery at all.
.@edballsmp response to GDP figures: "Now that growth has finally returned..." After 5 straight quarters of growth. #painful
. @edballsmp also manages to use "built to last" 3 times in his response to GDP. Nightmare x3 in Ed M's office...
10.36am BST
The 1.3% rise in manufacturing output last quarter suggests the UK is benefitting from the recent pick-up in economic conditions in Europe.
Berenberg's Dr Christian Schulz reckons:
In a sign that the beginning recovery in the Eurozone, the UKs single most important export market, is helping the UK as well, the export-oriented manufacturing sector was the best performer of all sectors in Q1.
10.29am BST
Aengus Collins, UK Analyst at The Economist Intelligence Unit, is also in the Goldilocks camp, saying:
George Osborne will be happy with this morning's estimate that GDP increased by 0.8% quarter on quarter in the first three months of the year. It builds on the momentum developed last year, but without accelerating as rapidly as some official and private-sector analysts had forecast.
The economy remains vulnerable to the next cyclical downturn when it arrives
10.28am BST
James Knightley of ING reckons the UK economy will grow by 3% this year. That would beat other G7 economies -- indeed, New Zealand is the only developed economy that could do better, he predicts.
Given New Zealand has already started to tighten monetary policy [interest rates went up last week], this underlines our point that the risks remain skewed towards earlier Bank of England policy tightening than the second quarter of 2015, the point currently pencilled in by financial markets.
10.23am BST
Skimming through my inbox, several economists are pointing out that today's GDP estimate is only based on around 40% of the total economic data, and includes many assumptions and extrapolations. This means the growth rate could be revised up in a few weeks, they say.
This argument is particularly popular with economists who had forecast a growth rate of 0.9% or higher....
10.18am BST
Better late than never? That's the message from the TUC today, which chides George Osborne for snuffing out the recovery in 2010 with an austerity package that knocked the economy off course.
TUC General Secretary Frances OGrady also urged the Bank of England not to tighten monetary policy yet:
This is the kind of growth we could have seen two or three years ago if the government had not choked off recovery through cuts, austerity and wage freezes.
But however welcome these figures are the economy remains below its 2008 peak and most people have yet to see much benefit from growth. Pay and job prospects are still below pre-crash levels, and there will need to be many more years of figures like todays, before ordinary families recover lost ground.
10.16am BST
Here's our story on this morning's growth figures, by Katie Allen:
10.14am BST
Reaction is flooding in, with two economists declaring that Britain's economy has reached its Goldilocks moment -- not too hot, and not too cold.
Ian Stewart, chief economist at Deloitte, reckons the recovery looks sustainable with business investment and consumer incomes rising at long last.
The UK economy is in the sweet spot of the economic cycle, with growth powering ahead of our major competitors and inflation falling away.
The breakdown by output showed solid quarterly rises in both industrial production (+0.8%) and services output (+0.9%), though construction was soft at +0.3%. We dont have the expenditure breakdown yet, though the retail sales figures suggest that the recovery remains heavily dependent on consumer spending.
10.05am BST
Britain's production sector is still 10% smaller than before the collapse of Lehman Brothers, but the service sector has clawed back all the activity lost in the great recession.
ONS chief economist Joe Grice explains:
"This is the fifth consecutive quarter of steady growth. Overall, the economy is now only 0.6% below the pre-recession peak at the beginning of 2008.
In fact, services are now 2% above the pre-recession peak but the production and construction sectors are still around 12% lower."
9.58am BST
George Osborne may indeed spy the foundations of a broad-based recovery (see here), but Britain is still relying on the services sector for most of its growth.
This chart shows that Services (which grew by +0.9% in the quarter) provided almost all of the 0.8% increase in UK GDP in the last quarter.
9.52am BST
The prime minister has rolled out his favourite Twitter hashtag:
Today's #GDP figures show that Britain is coming back. There's no room for complacency, but our #LongTermEconomicPlan is working.
9.50am BST
So, UK economic growth did pick up pace in the early months of this year. 0.8% growth is a small acceleration on the 0.7% expansion recorded in October-December, and matches the growth seen last summer when the recovery finally kicked off.
But it's still a little shy of the 0.9% which the City had expected.
9.48am BST
You can see the ONS's preliminary estimate of UK GDP online, here (pdf).
9.44am BST
George Osborne was quick to hail today's growth figures as proof that "the foundations for a broad-based recovery" is underway.
Here's the chancellor's reaction to the news that UK GDP increased by 0.8% in the last quarter:
"Today's figures show that Britain is coming back - but we can't take that for granted. We have to carry on working through our long term economic plan.For the first time in a decade all three main sectors of the economy - manufacturing, services and construction - have grown by at least three per cent over the last year.
The impact of the Great Recession is still being felt, but the foundations for a broad based recovery are now in place. The biggest risk to economic security would be abandoning the plan that is laying those foundations."
9.38am BST
It was a strong quarter for manufacturing -- with output rising by 1.3% during the quarter. The March of the Makers picked up pace.
The wider measure of production output was dragged down by a drop in agricultural output (-0.7%) and a 2% drop in activity across the energy sector.
9.36am BST
The UK economy is still 0.6% below its pre-crisis peak in 2008, after the 0.8% rise in output in the first three months of the year.
If you exclude oil and gas output, though, it's actually 0.3% higher.
9.35am BST
Britain's dominant service sector grew by 0.9% during the quarter.
Industrial output rose by 0.8%, and construction output brought up the rear at +0.3% quarter-on-quarter.
9.33am BST
The UK economy has grown by 3.1% over the last year, the ONS says. That's the strongest year-on-year change in GDP since the fourth quarter of 2007, after the near-collapse of Northern Rock.
9.30am BST
Breaking: The UK economy grew by 0.8% in the first three months of 2014 - slightly below forecasts, but still showing solid growth.
9.28am BST
Two minutes to go until the ONS announces how well, or badly, the UK performed in the first three months....
9.26am BST
In the City, the FTSE 100 index of blue-chip companies has hit a seven-week high this morning, up 0.4% at 6727 points.
It's being driven by takeover rumours -- UK pharmaceuticals firm Shire (+3.1%) is apparently being eyed up by Allergan, the firm behind Botox. AstraZeneca, which is fighting off the advances of viagra-maker Pfizer, has dipped 1.4% this morning after surging 14% yesterday.
9.18am BST
Heads-up: Vince Cable, business secretary, is being grilled over the Royal Mail flotation this morning. Andrew Sparrow is live-blogging all the action from Westminster:
9.16am BST
Just 15 minutes until the Office for National Statistics announces its first estimate of UK growth for the last three months.
As covered in the opening post, the consensus is that GDP increased by 0.9% during the quarter.
All eyes on UK #GDP this morning but analysts may find themselves underwhelmed. 0.6% looks more likely than the stellar growth some predict
9.05am BST
The Bank of England governor, Mark Carney, has declared that Britain's recovery is starting to "broaden out", but he's not ready to raise interest rates yet.
There is every sign that the recovery is starting to broaden out and I would describe our attitude at the moment as prudently optimistic.
What is important is that we see longer-term growth, and the view that we are getting from businesses here in Bristol is that the signs coming from the economy are consistent with improved longer-term growth.
In order to see a return to consistent growth we need to see improvement across all sectors and we also need to see a substantial increase in wages.
We all want the recovery to be sustainable and the early signs are consistent with that. But we need to see real growth in every sector and in the current level of wages.
8.54am BST
Remember George Osborne's "March of the Makers" -- the chancellor's rallying cry in his March 2011 budget that British industry would drive the recovery?
It didn't get off to a good start -- indeed, it looked more like Napoleon's retreat from Moscow as factory struggled and Britain's balance of payments deficit soared in 2012.
Output in the manufacturing sector is likely to have expanded by 1.2% over the first quarter of 2014, which would equal the best performance since July-September 2010.
8.39am BST
London estate agent chain Foxtons (famous for garish Minis and pushy salespeople) has fuelled concerns that Britain's recovery is being driven by the fickle hand of the housing market.
It reported a 44% surge in core earnings in the last three months this morning. Chairman Gerry Watts declared that turnover was "well up", with profit margins "further enhanced".
London: you don't have to be mad to live here but it helps RT @CarolineHydeTV: Foxtons 1Q sales commissions +41%..."signif volume growth"
8.32am BST
Today's GDP data will confirm that Britain's economy has now been growing for 15 months in a row. We haven't seen a contraction in output since the last three months of 2012, when GDP shrank by 0.2%.
The UK economy grew by 0.4% in January-March 2013, then picked up pace in the middle of the year - with growth of 0.8% in the second and third quarters. It then slowed slightly in Q4, with growth of 0.7%.
8.23am BST
Our economics editor Larry Elliott explained on Sunday why a strong GDP reading today should be treated with caution.
GDP per capita (national output divided by the population) has shown little improvement since the depth of the crisis. The increase in economic output has been largely mirrored by the rise in population -- that's why people don't feel better off (the long run of falling real wages is the other factor, of course).
The last time the UK had a current account deficit of more than 5% of GDP was in the late 1980s, when the Lawson boom was about to collapse.
At that point, though, years of strong growth had left the public finances in the black and there was scope to let the public finances take the strain when the economy weakened. If the current surge in activity does prove to be short-lived, it will be no good looking to the Treasury for a fiscal boost. Instead, it will again be up to the Bank of England to keep the economy moving.
8.12am BST
Some City economists reckon the UK economy grew by as much as 1.1% in January-March, although others are more pessimistic.
Economics reporter Katie Allen writes:
Britain's economy clocked up its fastest growth for almost four years during the first quarter of 2014, outpacing other advanced nations, according to economists' forecasts ahead of official GDP data this morning.
The first official estimate of GDP for the January to March quarter due at 9.30am is expected to show the economy grew 0.9%, according to the consensus forecast in a Reuters poll of economists. That would mark an acceleration from 0.7% in the final quarter of 2013 and would be the fastest growth since the second quarter of 2010 when GDP rose 1%. There was a range of views in the poll of City analysts, with the highest forecast at 1.1% growth and the lowest 0.5%.
8.06am BST
Good morning, and welcome to our rolling coverage of events across the economy, the financial markets, the eurozone and the business world.
How strong is the UK recovery, and how sustainable it is?
The UK was one of the most severely impacted economies following the global financial crisis... Now, after a protracted period of weakness the economy is back on its feet and is growing robustly.
The Bank of England is preparing to order eight of the UK's biggest banks and building societies to ensure they are strong enough to withstand sharp drops in house prices and sudden rises in interest rates.
Before the formal publication of the tests, Sky News said banks would be required to show they could survive a 35% fall in house prices and interest rates jumping to 5%, after five years at a record low of 0.5%. The conditions that banks must be able to withstand are to be outlined by the Bank of England on Tuesday.
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