All eyes are now on services PMIs for the eurozone and the UK 8.23am BST Turning to Greece, a leading think tank in the UK has warned that the new round of austerity measures demanded by its international creditors will mean that the battered economy remains stuck in permanent depression – unless it receives substantial debt relief.The National Institute of Economic and Social Research estimates that a haircut of 55% on Greek debt is needed to give the country a chance of reducing its debt to 120% of GDP by 2020. It warned that continuing to insist on “unrealistic fiscal targets” will ensure that the Greek economy will “remain in depression”. 8.11am BST Sir Charlie Bean, former deputy governor of the Bank of England launches his official review into Britain’s official economic statistics on Wednesday. He told the Financial Times (£) that the “Big Data” revolution on the internet has rendered Britain’s stats out of date. Bean noted that the framework for for the national accounts “was developed in the aftermath of the Great Depression”. As an economy develops, the traditional ways of thinking about it cease to be so relevant,” 8.01am BST The pound is also in focus again, ahead of Super Thursday – the Bank of England’s big day when for the first time it will announce interest rates and release the minutes of its policy meeting at the same time. On top of this, the central bank will release its inflation report with the latest growth and inflation projections. Angus Campbell, senior analyst at FxPro Daily, has looked at the interest rate outlook in the UK and US and the impact on the pound:This wealth of data could overwhelm investors and we are likely to see some volatility following the release, where the market is expecting the first votes for a hike from at least a couple of monetary policy committee members since the hawks were last calling for the base rate to rise last year. What has been made clear by both the Federal Reserve’s Janet Yellen and the BOE’s Mark Carney is that rates are going to move upwards soon. For the BOE the challenge is to determine whether, at a time of very low inflation, wage growth is robust enough to warrant the commencement of rises later this year or early next year, especially at a time when recent data has been indicating the economy is coming off the boil. This week alone has seen unimpressive PMI surveys for the UK and this morning sees the important services PMI release which is expected to dip from 58.5 to 58.0. Anything lower than 58.0 could put sterling under pressure. 7.56am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.We’ve woken up to news that China’s services sector expanded at its fastest pace in 11 months in July, offsetting some of the pressure from a faltering manufacturing industry. Continue reading...
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