Rolling business and financial news, with the IMF warning that a long period of ultra-low interest rates could trigger a fresh financial crisis by encouraging excessive risk-taking, while the World Bank warned of a $32.6bn hit to west Africa if Ebola spreads further 5.53pm BST Over to Greece where three days of debate on a confidence motion submitted by the countrys prime minister has just begun. The vote is likely to spark fierce denunciations of the governments bailout programme. Helena Smith reports from Athens:For MPs gathered in Greeces 300-seat parliament the choice is simple: either they vote for prime minister Antonis Samaras two-party coalition and allow it to adopt controversial reforms (the price of 24bn in aid from the EU and IMF) or they refuse to give it the mandate required to continue in office. With 154 lawmakers backing his administration, Samaras will almost certainly pass the test. But pundits are in no doubt that he will also get a run for his money. In a climate of high political tension, Alexis Tsipras, leader of the radical left main opposition Syriza party, has been sharpening his rhetorical sword, declaring that a vote of confidence can only come form the people.Syriza stalwarts say they will use the occasion to not only deliver a stinging rebuke of the governments catastrophic policies, but as a chance to present their own anti-austerity programme.Indicative of the explosive atmosphere, Samaras was rounded on before the debate even began with MPs denouncing his absence. The conservative leader, who is in Milan attending an EU summit called to examine the issue of unemployment, will address the House on Friday in advance of the midnight ballot taking place. With international creditors demanding that Greece steps up its reform process, Samaras hopes the government will be further reinforced with backing from independent MPs a move that would enable it to execute the measures lenders are baying for at a faster pace.Yields on Greek bonds have risen sharply, a reflection of investor fears that Athens is almost certainly in for a period of prolonged political paralysis if, as also looks likely, parliament fails to elect a president in February.Highlighting the dangers that lay ahead, Greeces deputy premier Evangelos Venizelos warned that political uncertainty was not only undermining Athens shaky coalition but its economic achievements at a time when Greece was now plotting its exit from the bailout programme. 5.32pm BST The continuing combination of worries about a slowdown in economic growth, and geopolitical concerns such as the possible spread of the Ebola virus, combined once more to put markets under pressure. But an early rise on Wall Street ahead of the latest Federal Reserve minutes and the start of the US reporting season with Alcoa helped European markets come off their worst levels. The closing scores showed: 4.36pm BST As Italys prime minister Matteo Renzi asks coalition partners to back his labour reforms, Reuters is reporting that the EU commission is unlikely to accept the countrys multi-year budget plan.Renzi is expected to win a confidence vote later on the change to labour laws, but that is not his only concern at the moment. The EU commission is not keen on a proposal to delay achieving a balanced budget by a year until 2017, part of Italys stability programme unveiled last month. 3.40pm BST Oil prices are slipping back after higher than expected US crude oil inventories, up 5m barrels on the week. Brent crude is now down 1.2% at $90.97 a barrel.DOE US #crude oil inventories rose 5 million barrels last week - more than 2.1m expected. This is more bearish news for #WTI ^FR 3.32pm BST Now a quick bit of housekeeping: ECB President Mario Draghis speech at the Brookings Institute in Washington is tomorrow, Thursday, and not today. Heres how the Institute describes the event (details here):The European Central Bank has been at the center of an economic, financial and political storm in the eurozone, the union of 18 (soon to be 19) sovereign nations that share a common currency and which still suffers from high unemployment, slow growth, and inflation below the ECBs target. Its President, Mario Draghi, has on numerous occasions taken initiatives that have come to frame and define the policy debate in Europe, as he did with his recent address in Jackson Hole. How much more can monetary policy achieve in Europe? What lessons have been learned from this extraordinary period? Can the worlds central banks do better at maintaining financial stability than they have in the recent past?On October 9, the Hutchins Center on Fiscal and Monetary Policy at Brookings will host a presentation by the ECB President Mario Draghi on the latest developments in Europe and in global central banking. His remarks will be followed by a conversation between Mr. Draghi and Stanley Fischer, vice chair of the Federal Reserve Board. 3.24pm BST Heres an interesting chart from the IMF:IMF: Banking System Exposure to Emerging Market Economies (percent of total claims) pic.twitter.com/CXBHEydC0T 3.01pm BST With this, its time for me to hand over to my colleague Nick Fletcher. Thankyou for all your great comments, and good-bye. 3.00pm BST The press conference is over. IMF chief financial counselor warns of the "Illusion of liquidity" in fixed income markets. http://t.co/C4KYCD02CX pic.twitter.com/Qi04fkDjlT 2.58pm BST IMF: quarter of banks in advanced economies do not have adequate capital buffers http://t.co/dFYIVXZFh5 pic.twitter.com/ArEDc8aJIZ 2.57pm BST Viñals is now talking about the need for more supervision of systemically important banks, across borders. 2.45pm BST Wall Street has started trading: The Dow Jones and the S&P 500 opened 0.01% lower while the Nasdaq was up 0.03%. The FTSE has recovered from earlier losses and is now down only 0.08% at 6490.53. 2.40pm BST The Guardians Larry Elliott asks: What is the next sub-prime going to be?In response, Viñals highlights the growth of the shadow banking system, particularly in the US. Shadow banks that operate outside the tightly regulated banking sector are providing financing where many traditional banks cant fulfill that role. (Shadow banks areinstitutions such as hedge funds, money market funds and investment banks that do not take deposits from the public.) 2.33pm BST Back in London, the Office for National Statistics has confirmed the introduction of new economic well-being release. From December, the ONS will publish a regular set of indicators of economic well-being that supplement more traditional measures such as GDP and, it says, will give a more rounded and comprehensive basis for assessing changes in material well-being.ONS Chief Economic Adviser Joe Grice said:While its right that GDP plays a central role in monetary and fiscal policy, it has long been recognised as presenting an incomplete picture of how our society is doing.The UK will be one of the first countries to bring together official statistics on other measures that will tell us, for example, how households are doing, including how well off people are feeling. This can help inform important decisions by people businesses and policy makers. 2.28pm BST Mohamed El-Erian, chief economic adviser at German insurer Allianz, has compiled a to-do list for the IMF and World Bank.FYI,some thoughts on how to improve prospects for the upcoming #IMF / @WorldBank meetings in #Washington @BV @IMFnews http://t.co/igiGQTrKw7 2.25pm BST Took them this long to realize it? IMF: Shadow Banks Could Compromise Global Financial Stability http://t.co/9I09LLxmCyWhy are they called 'shadow' banks if they operate out in the open? http://t.co/klqOYVDCdX 2.23pm BST Viñals called on governments to address the global imbalance on risk-taking and prevent excesses in financial risk-taking. Monetary policy cannot be the only game in town. 2.20pm BST Turning to banks, Viñals says:The good news is that banks are much safer than they used to be a few years back.The not so good news is many banks dont yet have the financial muscle to provide vigorous support to the recovery.Eurozone banks not strong enough to be athletes who can vigorously support the recovery, says the IMF. http://t.co/YjzjZCFiqS 2.16pm BST IMF questions fitness of eurozone banks http://t.co/DcckGrkqHsIMF says banks need to overhaul business to restore profits http://t.co/bRL7KG37Kr 2.15pm BST José Viñals, the Financial Counsellor and Director of the Monetary and Capital Markets Department of the IMF, says the world is facing a new global imbalance. There is not enough risk-taking in some areas to encourage business investment but increasing excesses in financial risk-taking which may undermine stability. 2.12pm BST The IMF press conference is under way. 2.11pm BST The Guardians Larry Elliott, who is in Washington, says the Wall Street Journal story about thermometers being handed to delegates at the IMF/World Bank meetings is a bit of an exaggeration. Offered to people coming to meetings from west Africa but not to all. I havent been given one! 2.01pm BST You can watch the IMFs press conference live here. 2.01pm BST The International Monetary Fund has released its global financial stability report, in which the organisation warns that a prolonged period of ultra-low interest rates pose the threat of a fresh financial crisis by encouraging excessive risk taking on global markets. Our economics editor Larry Elliott reports:The Washington-based IMF said more than half a decade in which official borrowing costs have been close to zero had encouraged speculation rather than the hoped-for pick up in investment.Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges. 12.39pm BST More on the World Bank report on Ebola. With the death toll from Ebola now at 3,439 in the three worst-affected countries of Guinea, Liberia, and Sierra Leone, the report says that if the epidemic was to significantly infect people in neighboring countries, some of which have much larger economies, the financial impact could reach $32.6bn by the end of 2015.The economic impact could be limited if immediate national and international action stop the epidemic and alleviate the aversion behavior or fear factor that is causing neighboring countries to close their borders, and airlines and other regional and international companies to suspend their commercial activities in the three worst-affected countries, the World Bank said. The successful containment of Ebola in Nigeria and Senegal so far is evidence that this is possible, given some existing health system capacity and a resolute policy response.With Ebolas potential to inflict massive economic costs on Guinea, Liberia, and Sierra Leone and the rest of their neighbors in West Africa, the international community must find ways to get past logistical roadblocks and bring in more doctors and trained medical staff, more hospital beds, and more health and development support to help stop Ebola in its tracks. 12.22pm BST At the IMF/World Bank meetings in Washington, delegates are being handed free thermometers as a precaution against Ebola, the Wall Street Journal reports. Thousands of finance officials, economists, bankers and reps from nonprofit organisations from nearly every nation are gathering in the US capital to debate the darkening economic outlook. They include officials from the West African nations where the outbreak is raging Sierra Leone, Guinea and Liberia. 12.16pm BST Back to Ebola. The Ebola epidemic could cost the west African economy $32.6bn over the next year if officials dont get to grips with it soon, the World Bank warned today.The economic impacts of Ebola are already very serious in the core three countries - particularly Liberia and Sierra Leone - and could become catastrophic under a slow-containment, high-Ebola scenario. 12.05pm BST Germany is stalling, but the risk of a genuine recession is still only 17% according to our "nowcast" models http://t.co/szDjvrhSaH 11.19am BST A group of leading economic institutes in Germany is poised to slash its forecasts for economic growth, newspaper Handelsblatt reported.The institutes, whose analysis is used by the German government to compile its own forecasts, are now predicting 1.3% growth for this year and 1.2% in 2015 compared with 1.9% and 2% previously. They are due to publish the new predictions on Thursday. 11.07am BST Following Tuesdays warning from the IMF, the Organisation for Economic Co-operation and Development has chipped in and said that growth in the eurozone is losing momentum. My colleague Angela Monaghan reports:The Paris-based think tanks monthly composite leading indicactors are designed to spot shifts in economic cycles early on. The latest snapshot suggests the German and Italian economies are most rapidly losing steam:In Europe, signs are emerging of a loss of growth momentum in the Euro area, with stronger signals in the case of Germany and Italy, while in France and in the United Kingdom the outlook continues to point to stable growth. 10.50am BST Britains proposed £16bn nuclear power station at Hinkley Point in Somerset, to be built by French utility EDF, has been given the green light in Brussels. The European Commission said Britain agreed to make significant changes to the terms of the project financing, reducing the burden on taxpayers.The controversial new power station is part of Britains strategy to replace a fifth of its ageing nuclear power and coal plants. The project is a big boost for EDF, giving it a a guaranteed power price of £92.50 per megawatt hour for 35 years, more than twice the current market rate. 10.40am BST It is worth noting, as one reader, NicholasB pointed out, that the IMF did not downgrade the UK on Tuesday. It expects Britain to be the fastest-growing major economy this year, at 3.2% compared with downgrades for the eurozones three biggest economies, Germany, France and Italy. 10.27am BST Time for an update on the markets. The FTSE 100 index is now down nearly 0.6%, or 37.4 points, at 6458.18, while Germanys Dax has lost 0.9% and Frances CAC is off 0.36%.On bond markets, British 30-year gilt prices hit their highest level in more than two years as investors piled into safe-haven assets. 10.12am BST There is more to come from the IMF today, as the organisation holds its autumn meeting in Washington. It will release its global financial stability report at 2pm BST.The OECD is releasing its leading indicators report, looking at the growth outlook, at 11am BST. 9.44am BST KFC owner Yum Brands has warned on profits after a meat scare in China rocked sales. Like-for-like sales in the last quarter plunged 14% in its largest market, after allegations that fast-food chains including KFC and McDonalds were supplied meat past its expiration date. Yum is the biggest foreign restaurant chain operator in China with more than 6,400 outlets. 9.33am BST Back to Spain, where industrial production growth slowed in August, disappointing economists. Output rose just 0.6% compared with a revised 0.9% gain in July. Production of consumer goods remained flat in August while capital goods and energy fell 4% and 1.4% respectively. 9.26am BST Mike Ashley, the founder of retailer Sports Direct and owner of Newcastle United, is now trying to stir things up at Scottish club Rangers where he is a major shareholder.Just six days after doubling his holding in Rangers to almost 9%, Ashley called for an emergency meeting to have the clubs chief executive Graham Wallace and director Philip Nash ousted from the board. More here. 9.06am BST Meanwhile, Air France issued a profit warning in the aftermath of last months two-week pilot strike, one of the longest in the airlines history. It put the cost of the strike at 500m in lost revenue. The French flag carrier was in dispute with pilots over plans to expand its budget subsidiary Transavia to compete with the likes of easyJet and Ryanair (ironically, easyJet benefited hugely from the strike).Air France pilots are demanding the right for future pilots to be recruited on the same conditions (i.e. pay and benefits) as those currently working for the main airline, a point on which management wont budge. It argues it cant run a budget airline at Air France costs. 8.55am BST Shares in travel companies including budget carrier Easyjet, Iberia owner International Airlines Group and cruise company Carnival are down for a second day after a Spanish nurse became the first person outside Africa to contract the deadly Ebola virus. Fears that this could put people off travelling or that travel restrictions could be imposed hit travel companies. EasyJet shares lost nearly 3% this morning, Carnival was down almost 2% while IAG and Tui Travel shed 1.9%. 8.40am BST European shares have dropped to 1 1/2 month lows after the IMF downgrade triggered fresh fears over the world economy. The pan-European FTSEurofirst 300 index lost 0.6% to 1321.28, marking its lowest level since mid-August.Jonathan Sudaria, trader at London Capital Group, said:The IMF laid it on pretty thick yesterday... and topped it off with the cherry that global growth may never reach its pre-crisis levels ever again.In the short term at least, it appears that traders have also come to the same conclusion as there is no apparent let-up in the selling pressure this morning. 8.21am BST On the corporate front, shares in FirstGroup fell nearly 6% to 108.3p after the Aberdeen-based company lost the contract to operate the £2.5bn ScotRail franchise to Abellio, an offshoot of Dutch national railways. 8.15am BST The Halifax house price index is out: it shows house prices across the UK rising by 0.6% in September, more than expected. In the three months to September, prices climbed 9.6% on an annual basis, down from 9.7% in the three months to August.The mortgage lender reckons annual house price inflation has peaked around 10% and growth is likely to slow in coming months. 8.10am BST European stock markets have opened lower. The FTSE 100 index is down nearly 30 points, or 0.45%, at 6466.28. Germanys Dax has tumbled 0.7%, Frances CAC and Italys FTSE MIB have both shed 0.2% and Spains Ibex is down 0.4%. 8.07am BST UBS global economist Paul Donovan is rather scathing about the IMFs forecasting ability.Markets seem to be exhibiting some signs of concern about the pace of global growth, at least during Asian trading. The cited reason is IMF forecast downgrades, but that does not really make sense. The IMF always lags the consensus on GDP, and is not known for its pinpoint forecasting accuracy. 7.59am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and finance.The International Monetary Funds global growth downgrade has weighed heavily on equity markets around the world. Continue reading...
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