Sterling, already under pressure amid election uncertainty, falls to $1.4623French industrial output flat, while Spanish production continued to riseEuropean shares rise to 15-year high as euro slips 9.55am BST The pound has fallen to a five-year low of $1.4623.A sharp fall in oil and gas output in February is to blame for the small (0.1%) rise in industrial output. 9.53am BST Britain’s construction industry fared even worse, with output down 0.9% in February, wrongfooting City economists who had pencilled in 2% growth. In January, output slid 2.5%. 9.47am BST The pound is heading towards a five-year low of $1.4635 after disappointing industrial production data, which do not bode well for overall economic growth. A sharp fall in oil and gas output in February is to blame for the small (0.1%) rise in industrial output.The ONS said the 12% annual decline in oil and gas production in February was the biggest fall since August 2013. 9.41am BST However, markets are taking a dim view of the data. Sterling has dipped to $1.4669 from around $1.4685 before the figures were released. 9.38am BST Here is some instant reaction to the UK data. David Richardson, head of manufacturing at Lloyds Bank Commercial Banking, says: After an unsure start, it looks like manufacturers are getting back on track and helping to push industrial production back into positive growth. On the ground we see that boardroom confidence and the appetite to invest is high and it appears that this is now translating into healthy pipelines of activity. Management teams must stay this course and focus on expansion if they are to capitalise on the longer term growth prospects that the economy will no doubt present. 9.36am BST In the 3 months to February, industrial production and manufacturing were 10.4% and 4.9% respectively below their figures reached in the pre-downturn GDP peak in the first quarter of 2008, the ONS says. 9.34am BST UK industrial output is weaker than expected: it edged up 0.1% in February, vs expectations of a 0.4% gain, while manufacturing met City forecasts with a 0.4% rise. Industrial production is the wider measure, which comprises manufacturing, mining and utilities.You can find out more on the data on the Office for National Statistics’ website here. 9.21am BST “One more turn of the financial screw and Greece would be in capital controls; a terrible symptom of political failure of a six-year attempt to restore sustainability,” writes Gabriel Sterne, economist at Oxford Economics.Conditional on capital controls, we suggest probabilities for (1) a quick exit; (2) a slow exit; (3) recovery, drawing on lessons from Cyprus. €-exit would be our baseline, but is not inevitable.A detailed comparison with Cyprus establishes why the Greek case would likely be far more severe. Politics is key. In Cyprus, a new centre-right government implemented painful capital controls in the face of remarkably weak political opposition, and was able to pass on a big chunk of recapitalisation costs to foreign depositors. There was strong domestic support for deep fiscal and structural reforms. Within months the programme came to be seen as a credible path towards banking solvency, liquidity and fiscal sustainability; controls were removed after two years. 9.19am BST Athens faces another key week next week, when the Greek government will need to roll over €2.4bn worth of 3 and 6 month T-bills in bond auctions, as well as paying out over €1.5bn of social security payments. The ECB once again raised its Emergency liquidity assistance (ELA) facility yesterday by €1.2bn to just over €73bn, as capital continues to leak out of Greek banks. 9.12am BST Kuenzel at Daiwa believes Athens needs to “start dancing to the Eurogroup’s tune”. The group of eurozone finance ministers meets in Riga, Latvia, on 24 April.So, by 24 April, when the Eurogroup meets in Riga, the Greek reform plans need to be better specified, realistically costed and purged of counterproductive labour market and pension measures. Certainly, euro area finance ministers are probably at the end of their tether after ten weeks of the new government’s foot-dragging and game-playing, and any sympathy for the Greek position has long disappeared. And notwithstanding Tsipras’ comments in Moscow that the EU had more to lose than Greece if the rescue failed, it is clear that the Greek government’s bargaining position is exceedingly weak. Unlocking the existing bailout funds is Greece’s only option to avoid default and euro exit and the Eurogroup has been resolute in its message on what is required of Greece. So if the country is to receive further bailout money to save it from default in May, the Tsipras administration is going to have to start dancing to the Eurogroup’s tune. 9.06am BST For those who thought it was going to be a “Greece-free day” (it is Good Friday in Greece today): according to the Times, eurozone countries are secretly drawing up plans to kick Greece out of the currency bloc as they prepare for the country to be declared bankrupt next month.The story cites a memo drawn up by the finance ministry in Finland, which is closely allied to Germany.After Greece’s repayment of €460m to the IMF yesterday and the ECB’s decision to grant a further €1.2bn in Emergency Liquidity Assistance to Greek banks, the flow of crisis-related news is likely to die down during the Orthodox Easter weekend beginning today and running until Tuesday. But with only five working days remaining for the Greek administration to substantively improve on its reform offerings to the Eurogroup, the Greek government faces the Herculean task of developing - and legislating - a reform programme sufficient to unlock the remaining €7.2bn of bailout funds before the Eurogroup meets on 24 April. 8.55am BST Back to the pound. Analysts are warning that sterling could slide further ahead of the 7 May general election in the UK – the closest for more than 20 years. It’s fallen to $1.4681 this morning.Hewson at online trader CMC Markets says:The pound has started to come under some pressure in recent days as the prospect of political gridlock in a few weeks’ time starts to become a real possibility, at a time when some of the economic data is starting to show some signs of weakness. 8.34am BST In London, the FTSE 100 index has gained more than 30 points to 7047.70, a 0.5% rise. The Dax in Frankfurt is nearly 70 points ahead at 12235.11, a 0.6% gain, while the CAC in Paris has risen over 12 points, or 0.2%, to 5221.58. 8.31am BST European shares are rising again, as fears over Greece have eased somewhat following yesterday’s €450m debt repayment to the IMF.The pan-European FTSEurofirst 300 share index has powered ahead to hit is highest level since 2000, while the euro continued its slide, dropping to its lowest level since 19 March. The weak euro is good news for exporters. 8.19am BST Spain fared better, with a 0.6% rise in industrial production in February.CHART: Industrial production continues to rise in Spain. Still some upward potential to catch up with strong PMIs. pic.twitter.com/shikfE2M9m 8.11am BST Manufacturing in France was also unchanged in February, missing estimates of a 0.6% gain, after January’s revised decline of 0.3%. 8.09am BST Industrial output in France was flat in February.Contrast this with Greece, where production unexpectedly jumped by 1.9%.CHART: France industrial production stagnated in February, pausing upward trend. Still 15% below pre-crisis levels. pic.twitter.com/kida4dM0fA 8.04am BST European stock markets are expected to finish the week on a high, with the weak euro boosting exporters. 8.01am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.After another crunch day for Greece yesterday – Athens had to (and did) repay a €450m loan tranche to the International Monetary Fund – the focus is on the rest of Europe today, with industrial production data out for France, Spain and the UK.the potential for a return to the March lows of $1.4630, and possibly even lower, as we head towards the election next month, with the 2010 lows at $1.4230 now in play. To stabilise we need to move beyond the $1.5000 area, which has capped every rally for the last week. Continue reading...
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