Greece Misses Target on Budget Surplus

ATHENS—Greece announced a primary budget surplus of €1.9 billion ($2.24 billion) for 2014 on Wednesday, falling short of the target set for the year, in a miss largely due to a delay in the payment of its next tranche of aid. The country’s primary ...

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Greek Debt Cut Irrelevant for Now, Merkel Lawmakers Say

Greece doesn’t need a debt cut now to restore sound public finances because its debt redemption and interest payments to European creditors are on hold until 2020, lawmakers from German Chancellor Angela Merkel’s bloc said.

READ THE ORIGINAL POST AT www.bloomberg.com

IMF Chief: Jury’s Still Out On Whether Greece Debt Relief Needed

Top IMF officials have repeatedly said over the past two years that Greece’s debt levels were too high and could overwhelm the country’s fragile economy without some sort of debt relief. The fund pointed to a promise by Europe to help cut Greece’s ...

READ THE ORIGINAL POST AT blogs.wsj.com

Why most Europeans see poverty in their future

by  NEOnline

Struggling with low salaries, high unemployment and job insecurity, a majority of Europeans fear their troubles will only get worse, according to a recent report published by the Brussels-based Bruegel, a European think-tank specialising in economics.

The think-tank cited a Eurobarometer public opinion survey on the social impact of the crisis. A whopping 80% of Europeans believe poverty has increased over the past year, according to the findings of the survey which was conducted on behalf of the European Commission. In fact, after six years of recession, a third of respondents in Greece reported they have run out of money to pay for utilities, food and other daily consumer items. A similar situation was described by over 30% of respondents in Latvia, Lithuania, Bulgaria, Romania and Hungary.

The Eurobarometer survey no doubt paints a grim picture, but a deeper look at the situation is even more unsettling. This is based on the Severe Material Deprivation Rate – an indicator that assess poverty as the share of people who cannot afford at least four of these items: rent, mortgage or utility bills, heating, unexpected expenses, a meal of meat, chicken or fish every second day, one-week annual holiday away from home, a washing machine, colour television, telephone or a car.

According to this indicator, poverty varies widely across the 28-member European Union. For instance, Bulgaria has the highest rate (44.1%) and Luxembourg has the lowest (1.3%).

Other disparities can be seen between young and old. For instance, the Severe Material Deprivation Rate is 11.7% for youth (under 18) and only 7.5% for those over the age of 65.

As reported by Bruegel, whose membership includes EU governments, international corporations and institutions, this generational divide has increased since the start of the economic crisis.

“While the fall in severely materially deprived elderly people is a welcomed development, the adverse development for children is worrying,” Bruegel reports. “Looking at the unemployment rate, we observe an increase in all EU countries in the period 2007–2012 with the exception of Germany, while the rate remained practically unchanged in Austria, Malta, Finland and Poland.”

In 2007, the EU average unemployment rate stood at 7.2%. By the third quarter of 2013, this rate had increased to 10.9%. The countries with the lowest unemployment rates are Austria, Germany and Luxembourg, as opposed to Greece, Spain, Croatia, Cyprus and Portugal, where the rate is very high.

“Overall we note that there was an increase in the South-North divide in terms of unemployment, which has reached unacceptably high levels in several south European countries and leads to more polarisation across Europe,” reports Bruegel.

What is more, the percentage of people living in jobless households has increased significantly, especially in Ireland where one in five children in 2012 lived in a household where no one worked. The share of such children was higher than 15% in Bulgaria, the United Kingdom and Hungary.

Meanwhile, using the so-called Gini coefficient - the most commonly used measure of inequality, the highest levels of inequality in 2012 were registered in Latvia, Spain, Greece and Portugal. The lowest were reported in Slovenia, Czech Republic and Sweden.

According to Bruegel Director Guntram Wolff and Senior Fellow Zsolt Darvas, inequality in most advanced economies has been rising since the early 1980s and could be the reason for the pre-crisis increase in household debt and the consequent consumption squeeze during the crisis. As a result, the situation has undermined the citizens’ trust in the EU and their own governments.

This could devitalise the acceptability of painful structural reforms and fiscal consolidation measures and, in turn, diminish the reform momentum or even lead to political instability, according to Bruegel. 

READ THE ORIGINAL POST AT www.neurope.eu

Why most Europeans see poverty in their future

by  NEOnline

Struggling with low salaries, high unemployment and job insecurity, a majority of Europeans fear their troubles will only get worse, according to a recent report published by the Brussels-based Bruegel, a European think-tank specialising in economics.

The think-tank cited a Eurobarometer public opinion survey on the social impact of the crisis. A whopping 80% of Europeans believe poverty has increased over the past year, according to the findings of the survey which was conducted on behalf of the European Commission. In fact, after six years of recession, a third of respondents in Greece reported they have run out of money to pay for utilities, food and other daily consumer items. A similar situation was described by over 30% of respondents in Latvia, Lithuania, Bulgaria, Romania and Hungary.

The Eurobarometer survey no doubt paints a grim picture, but a deeper look at the situation is even more unsettling. This is based on the Severe Material Deprivation Rate – an indicator that assess poverty as the share of people who cannot afford at least four of these items: rent, mortgage or utility bills, heating, unexpected expenses, a meal of meat, chicken or fish every second day, one-week annual holiday away from home, a washing machine, colour television, telephone or a car.

According to this indicator, poverty varies widely across the 28-member European Union. For instance, Bulgaria has the highest rate (44.1%) and Luxembourg has the lowest (1.3%).

Other disparities can be seen between young and old. For instance, the Severe Material Deprivation Rate is 11.7% for youth (under 18) and only 7.5% for those over the age of 65.

As reported by Bruegel, whose membership includes EU governments, international corporations and institutions, this generational divide has increased since the start of the economic crisis.

“While the fall in severely materially deprived elderly people is a welcomed development, the adverse development for children is worrying,” Bruegel reports. “Looking at the unemployment rate, we observe an increase in all EU countries in the period 2007–2012 with the exception of Germany, while the rate remained practically unchanged in Austria, Malta, Finland and Poland.”

In 2007, the EU average unemployment rate stood at 7.2%. By the third quarter of 2013, this rate had increased to 10.9%. The countries with the lowest unemployment rates are Austria, Germany and Luxembourg, as opposed to Greece, Spain, Croatia, Cyprus and Portugal, where the rate is very high.

“Overall we note that there was an increase in the South-North divide in terms of unemployment, which has reached unacceptably high levels in several south European countries and leads to more polarisation across Europe,” reports Bruegel.

What is more, the percentage of people living in jobless households has increased significantly, especially in Ireland where one in five children in 2012 lived in a household where no one worked. The share of such children was higher than 15% in Bulgaria, the United Kingdom and Hungary.

Meanwhile, using the so-called Gini coefficient - the most commonly used measure of inequality, the highest levels of inequality in 2012 were registered in Latvia, Spain, Greece and Portugal. The lowest were reported in Slovenia, Czech Republic and Sweden.

According to Bruegel Director Guntram Wolff and Senior Fellow Zsolt Darvas, inequality in most advanced economies has been rising since the early 1980s and could be the reason for the pre-crisis increase in household debt and the consequent consumption squeeze during the crisis. As a result, the situation has undermined the citizens’ trust in the EU and their own governments.

This could devitalise the acceptability of painful structural reforms and fiscal consolidation measures and, in turn, diminish the reform momentum or even lead to political instability, according to Bruegel. 

READ THE ORIGINAL POST AT www.neurope.eu

EU governments cut deficits, Greece more than expected

In 2013, governments in Europe were able to substantially lower their budget deficits, according to the latest EU data. Nevertheless, EU countries are still laboring under huge and even burgeoning debt mountains. Last year, governments in the 18-nation ...

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The Greek ambassador: Romania's economy has no sufficient funding. The solution: EU funds

READ THE ORIGINAL POST AT actmedia.eu

Greek primary budget surplus at 707 mln in first half of 2014

Greece’s primary budget surplus was 707 million euros in the first half of the year, some 70 million euros ahead of target, the Finance Ministry said on Monday. During the same period last year Greece produced a primary deficit of 1.51 billion euros. The ... ...

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1st European Interns Day. Occupying Place Lux

by  Stylia Kampani

On Friday July 18th, around 200 interns, young professionals, officials from EU institutions, and civil society organisations, took over Place du Luxembourg to protest in front of the Parliament against interns’ precarious working conditions in Europe. The event was organized by the InternsGoPro, a social enterprise which works to boost youth employment in Europe by promoting quality internships. Together with InternsGoPro, other 20 NGOs from 8 different countries actively supported this initiative, among others, the European Youth Forum, European Alternatives, Brussels Interns NGO.

This was the second event dedicated to the “Interns Generation” after the “Sandwich protest”, which took place almost a year ago at the same venue.

According to the European Commission 5.2 million young people were unemployed in the EU-28 area in May 2014. The youth unemployment particularly in the countries hit hardest by the financial crisis, is still over 50% with no real signs of recovery to come. The EU has adopted several measures so far to alleviate the pain of the younger generation, including the Youth Guarantee, the Youth Employment Initiative, has mobilized the European Social Fund, the Programme for Employment and Social Innovation (EaSI).

Sotiria Theodoropoulou, Senior Researcher at the European Trade Unions Institute in Brussels, commenting on the event said: “Unemployment has risen in general across Europe, which also led to the rise of the youth unemployment. Things are different among the member states. For instance Greece had traditionally higher youth unemployment rates, which has to do also with structural issues such as the transition from the educational system to the job market. As long as there is no job creation, the percentages will remain high no matter how many measures against the youth unemployment the EU is going to take. They might have a positive impact but not a significant one.”

So far there is no concrete solution when it comes to precarious jobs and unpaid internships, traineeships or vocational training which young Europeans are forced to undertake with a view to securing a normal job. Besides, the European Employment Ministers Informal meeting in Milan on (17-18 July) touched upon the issue of “youth drain” and not on policies to tackle youth unemployment.

But those young people are determined to bring a change by launching the first European Label for Quality Internships, which they developed throughout workshops in a 6 month-tour across Europe. With this Label they aim to allow young people to identify the good employers, on the basis of peer-to-peer internships ratings. In this order, quality internships shall boost employability and minimize the risk of undertaking an internship of poor learning quality.

Allan Päll from the European Youth Forum explained that there is need to adopt a standard Label for Quality internships as this will give more transparency among the interns, who will be able to rate their own employers.

Support from the MEPs

Commissioners as well as many MEPs have endorsed the initiative and sent encouraging messages or videos to the young people.

“Such initiative is even more important since it is taking place after a very important Strasbourg session where Members of the European Parliament have extensively discussed with outgoing Commissioner László Andor the issue of youth employment and conditions of young people in the labour market,” said the MEP Brando Benifei.

"All the initiatives, as the European Interns' Day, aiming at restoring equality in the labour market for young people, must be supported. The temptation of some, basing their arguments on the crisis, to impose to young people lower job standards and conditions, are unacceptable. Quality jobs for young people is a right, as well as a strong lever to recover from the economic crises", said theMEP Maria Arena

Androulla Vassiliou, Commissioner for ‪education‬, culture, Multilingualism and ‪Youth‬ also supported this initiative and participated in the panel discussion organized in the European Parliament. "‪Internships‬ are critical in bridging the gap between the world of education and the world of work, offering hands-on work experience. But they should never be a tool for exploitation of our youth. We need quality internships across Europe."

Commissioner for ‪‎employment‬, social affairs and inclusion, Laszlo Andor said in a video message: "It is unacceptable that some ‪trainees‬ are currently exploited as free or cheap labour. Member States shall now implement the Quality Framework for Traineeships to ensure that trainees receive valuable training and experience to get a job, under good working conditions.

What’s next?

“Keeping the issue on the top of the agenda after the European Elections and the appointment of new Commissioners is one of our priorities. And it is very positive that the European Parliament adopted the resolution on youth employment, so our role from now on is to follow up and push for political change”, says Allan Päll.

While Sotiria Theodoropoulou is looking at the issue from the macroeconomic point of view: “The problem with the lasting unemployment is that it discourages the young people for a job and their relation with the job market is being traumatized. It is possible that when growth and recovery come, they will not be able to become absorbed and actively look for a job”.

There will be no overnight solutions, but at least such initiatives highlight the energy and motivation of younger people to bring a change.

 

READ THE ORIGINAL POST AT www.neurope.eu

Greece Faces Uphill Battle to Tackle Crisis

HALIFAX, NOVA SCOTIA (IDN) - Greece faces the unenviable choice between accepting the terms of “the Troika” and facing the continuation and deepening of a socio-economic crises, which includes five years of negative growth, over 23% unemployment, an ...

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Greek Creditors Refine Debt-Cut Plans

Greece's international creditors are considering making debt relief for Athens conditional on reforms in a bid to keep a grip on the country's economic policies after its bailout program finishes.

READ THE ORIGINAL POST AT online.wsj.com

Parliament gives go-ahead for Lithuania to join the euro

by  KG/EUROPA

Lithuania should join the euro on 1 January 2015, recommends the European Parliament in a resolution voted on Wednesday. This vote is in line with a European Commission recommendation and political backing from EU heads of state or government at the June EU Council summit.

Parliament's recommendation was passed by 545 votes to 116 and with 34 abstentions. It "endorses the adoption of the euro by Lithuania on 1 January 2015".

"This is good news for Lithuania, Baltic states and the stability of Europe. Since 2006 there has been intensive work, which led to low inflation, a stable exchange rate, a low budget deficit and an acceptable debt to GDP ratio. Welcome to the Eurozone Lithuania", said rapporter Werner Langen (EPP, DE).

MEPs welcome the fact that Lithuania has met all the euro eligibility criteria: recent 12-monthly average inflation 0.6 % (well below the reference value of 1.7%); a general government deficit in 2013 of 2.1% of GDP (reference value: 3%) and a gross debt ratio of 39.4% of GDP (well below the 60% reference value).

Lithuania is to become the 19th member of the Eurozone, after Latvia (2014), Estonia (2011), Slovakia (2009), Cyprus and Malta (2008), Slovenia (2007), Greece (2001), and Belgium, Germany, France, Ireland, Spain, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland (1999).

Next steps

The European Parliament plays a consultative role in scrutinising the fitness of prospective Eurozone countries. A final go-ahead is expected from EU General Affairs Council on 23 July.

READ THE ORIGINAL POST AT www.neurope.eu

Burberry faces shareholder revolt

Mixed day for Asian stocks, European investors expected to remain wary.Burberry to face shareholder anger over £20m executive pay dealConstruction data in the UK awaited

11.03am BST

Shareholders are gathering in London for Burberry' annual general meeting, due to kick off shortly. The FTSE100 company has raised shareholders' ire with the £20m pay package for chief executive Christopher Bailey.

As the Guardian revealed in May, Bailey has been handed a golden hello in shares worth up to £7.6m and an annual pay package worth up to £8.1m a year, including a £440,000 cash allowance to cover clothing and other items.

Are Burberry shareholders better dressed? Will Anna Wintour be in the front row? #burberryagm

10.45am BST

Italian bond yields, a crucial measure of investor confidence in a country, have fallen to record lows.

The Italian treasury has sold 7.5bn of bonds, the top of its target range, after selling 3-yr, 7-yr and 15-yr bonds.

Italy is not Portugal. Yields at Italian 3-yr and 15-yr bond auctions today fall to a euro lifetime low.

@ReutersJamie because Italian banks are better...

How do you borrow 1.15 BILLION with 17.6 MILLION of guarantees? Own the bank you borrow from. That's what Espírito Santo companies did.

10.35am BST

Economists were surprised by official data showing a 1.1% fall in construction output in May. Here is a round-up of reactions I have seen so far

Howard Archer at IHS Global Insight, thinks the outlook for construction remains encouraging, although today's "disappointing" result will weigh on second quarter GDP figures.

While Mays construction output data are very disappointing and there has clearly been a recent loss of momentum in the sector, there is hope for the future as latest survey evidence is very healthy overall. Specifically, the purchasing managers survey indicates that construction output rose at the fastest rate for four months in June and for a 14th consecutive month...

What is particularly encouraging is that the purchasing managers survey indicates that the strength in activity is widespread across sectors. Housebuilding activity is leading the way with activity picking up markedly in June to almost match Januarys 10-year high. Meanwhile, commercial activity was at its second highest level (after January) since August 2007. Commercial activity is also relatively elevated despite easing back to a nine-month low in June; this was reported to be partly due to the ending of some work related to repairing Februarys flood damage..

The prospects still look largely decent across most sectors. Extended improved economic activity and increased business confidence should underpin commercial construction activity and civil engineering.

The construction industry moved into reverse in May, according to official data. The weakness of these data alongside disappointing manufacturing output data for May suggest that policymakers will be encouraged to err on the side of caution about hiking interest rates too early in what looks to be a still-fragile recovery...

Even with this disappointing construction number, the official data available so far and the PMI surveys indicate that the UK economy enjoyed another robust economic expansion in the second quarter, at least matching the 0.8% growth seen in the first quarter. Once the volatility in the official data is accounted for, theres also little sign of momentum waning as we move into the second half of the year.

9.59am BST

The Bank of England has warned British banks that they may need to set aside more capital under new global rules to prevent a rerun of the financial crisis.

In a consultation paper launched today the Bank said lenders may need to set aside additional funds on top of the 3% of capital currently required.

"There may be a case to introduce a supplementary leverage ratio component to a subset of firms (e.g. ring-fenced banks and/or systemically important institutions) whose failure would be most destabilising for the financial system," the BoE said in a consultation paper.

Such a supplement would effectively cover the bulk of Britain's banks. British lawmakers want a leverage ratio of 4 % or above, higher than the proposed global rule for 3 %, saying tougher measures are needed to ensure taxpayers are not asked to bail out banks as they were in the financial crisis.British banks have been required to meet the 3 % target by Jan. 1, 2014, forcing some to raise more capital.

9.46am BST

Building sites were less busy in May, raising concerns that this important sector of the UK economy, which has helped drive forward the recovery, is stalling.

The ONS reported a 1.1% fall in May on the previous month, driven mainly by a fall in private commercial work down 3.6%, and repair & maintenance, down 1.1%.

The recent increase in housing construction output is likely to reflect recent changes in house prices, which have given developers an incentive to supply more new homes.

9.34am BST

Another May miss - UK Construction Output declines 1.1% exp: 0.9% gain #gbp

Construction output in the UK pretty weak -1.1% v +0.9% expected m/m

9.33am BST

Breaking news: UK construction output fell 1.1% in May compared to the previous month, the biggest fall since February according to data just released by the Office for National Statistics.

Output was up 3.5% in May 2014 on the previous year.

9.26am BST

A few recent headlines, courtesy of Zerohedge, which has compiled a handy list of upbeat statements from European leaders about Portugal.

Here is a flavour:

9.22am BST

Is the Eurozone crisis back?

We are far away from panic levels of 2011-12, when markets pushed southern European bonds to eye-watering levels and governments wobbled. But yesterday's panic sell-off is an unpleasant reminder for European leaders about how much work needs to do to repair the financial system.

It shows what a crazy financial system we have created when one small financial institution can cause such shockwaves around the world. It also demonstrates that European politicians who so famously said that they would break the link between banks and sovereigns have singularly failed to do so.

That is not a surprise because under our current financial system it is impossible to break that link. What we need is not minor tinkering with the regulations but a complete overhaul of the banking system.

The good: This is not the eurozone financial crisis flaring up again. Just a cursory glance at the government bond yields of Spain and Italy - the most accurate gauge of sentiment towards the bloc's periphery - shows that today's events are a world apart from the panic that engulfed Europe's single currency area in 2011 and 2012. Even after a 40 basis point rise this week, Portugal's 5-year bond yield is still just a tad higher than its US equivalent. Spanish and Italian 10-year yields remain under 3% and are only slightly above their UK equivalent...

The bad: It's not Espírito Santo that's the problem. It's the bleak fundamentals of the eurozone periphery which have become worryingly detached from the region's buoyant financial markets. The rally in peripheral debt has looked overdone for quite some time. The tug-of-war between central bank largesse and economic, financial and political vulnerabilities in the eurozone has been dominated by the latter, fuelling an increasingly indiscriminate "grab for yield". The question is whether Espírito Santo jolts investors out of their complacency about the risks in the eurozone.

8.54am BST

Vince Cable has taken to the airwaves this morning to defend the government's handling of the sale of Royal Mail, after a committee of MPs concluded that the taxpayer had lost out on £1bn.

Speaking on BBC Radio 4 Today's programme the business secretary said the committee had the benefit of hindsight.

We sold at a price that was regarded as the best that could be achieved in the context in which we sold it.

The point we have stressed, and I've stressed over and again, that the price of shares is very, very volatile - these things go up and down and we've seen in the last few weeks the price of Royal Mail shares actually falling like a stone.

It's not uncommon but that doesn't mean to say that it's right.

It's very important that the Government, above all, when it does sell off a public asset does so through a process which quite clearly demonstrates that nobody advising has a conflict of interest.

8.34am BST

The Portuguese bank at the centre of the sell-off storm has issued a statement saying that it has enough capital to meet its regulatory requirements.

Issued late last night after its shares were suspended from Portugal's stock exchange, Banco Espirito Santo said it had 2.1bn over and above regulatory requirements on 31 March.

BES Executive Committee believes that the potential losses resulting from the exposure to Espírito Santo Group do not compromise the compliance with the regulatory capital requirements.

8.18am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and the business world.

European markets have rallied after Thursday's sell-off, but investors are likely to remain wary amid renewed fears about the eurozone economy.

None of the underlying problems that served to create the [eurozone] crisis have been dealt with, namely the sovereign debt feedback loop between banks and the governments they fund.

The crisis in Portugal is a direct consequence of this failure, along with an almost shocking complacency on the part of investors who have driven bond yields in countries like Greece, Portugal, Spain and Italy to, in some cases, record lows.

Continue reading...

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The jobless generation

Not a single measure has been introduced over the past few years aimed at helping jobless Greeks who are middle-aged or older. Labor Ministry officials behave as if unemployment is not an issue among people in those age groups. The fact is that the partic... ...

READ THE ORIGINAL POST AT www.ekathimerini.com

European stock markets hit by Portuguese bank fears -- business live

Rolling business and financial news through the day, as concerns over Portugal's largest bank send shares down across Europe

Fears over Espirito Santo International <- new readers start hereBanco Espirito Santo shares suspended after tumblePortugal's bond yields jumpAnalyst: it's not a new eurocrisisBut crisis could hit confidence in Portugal

3.47pm BST

Today's selloff is a blow to anyone who took part in Banco Espirito Santo's recent rights issue.

It raised funds by selling new shares at 0.65 each. Today's 17% tumble sent them down to just 0.51 before trading was suspended.

That resounding doh! echoing around Europe is BES investors who supported June rights issue at 0.65. Price now 0.51. http://t.co/AFTyWaAnBu

3.42pm BST

Banco Espirito Santo's problems come at a tricky time for the banking sector, points out Jasper Lawler of CMC Markets:

Banks in particular are under massive scrutiny with European banks being targeted by the US regulators while banks in the US and Europe face tougher capital requirements as part of bank stress tests.

With tougher capital requirements, it means banks need to keep more money in reserve and cant lend it out and make returns. This problem is exacerbated in Europe where weak economies are not generating demand for banks loans in the first place.

3.34pm BST

We're not free of World Cup analogies yet....

Oh how quickly the tide has turned...not so long ago, we hailed Portugal as a #WorldCup savior for US & now it's to blame to stock drop...

3.24pm BST

2.55pm BST

Worries over the health of one of Portugal's largest financial groups hit the country's stock market hard on Thursday and pushed up its borrowing rates.

2.38pm BST

Europe's stock markets remain deep in the red too, led by Portugal's PSI index

Espirito Santo -17,4% UBI Banca -5,3% Unicredit -4,3% BBVA -4% Commerzbank -3,9% Soc Gen -3,7% Credit Agricole -3,7% Barclays -3,4%

2.36pm BST

Wall Street has just opened, and the main share indices have promptly dropped as US investors react to the selloff in Europe.

2.24pm BST

There's no suggestion that Banco Espirito Santo customers are panicking, by the way, despite concerns over the health of its parent company. This photo of a branch in Lisbon shows a definite absence of queues....

2.16pm BST

Stock futures fall sharply on Europe worries: http://t.co/WKo93nYiPG pic.twitter.com/J84EEFWhcU

2.15pm BST

The Wall Street Journal has pulled together more analyst reaction to the situation at Espírito Santo International (ESI) after it suspended some bond repayments on certain short-term bonds yesterday, and the knock-on impact on Portuguese lender Banco Espirito Santo (BES).

Analysts at the Royal Bank of Canada highlighted that the problems relating to ESI could have a much wider impact on the country's economy if they persist.

"While the aforementioned case is likely to be an isolated one it clearly highlights the problems of early bailout exits whilst the economy, the banking system and the public finances are still in a shaky state," they wrote in a note.

2.07pm BST

Here's a useful chart explaining how Banco Espirito Santo fits into the Espirito Santo Group structure.

Espirito Santo Group structure (may come in handy) ... pic.twitter.com/LUYIuE4sVC

2.05pm BST

Shares on Wall Street are also expected to fall when trading begins in around 30 minutes:

S&P expected to fall 1 pct at open on fears over Portugal's Espirito Santo

2.01pm BST

Another reason not to panic too much -- as Aurelija Augulyte of Nordea Markets points out, Portuguese government bond yields are still near their lowest point in four years:

yeah European crisis is baaaaack pic.twitter.com/nrokrT4h1V

1.44pm BST

Here's an interesting chart - it shows how the cost of insuring Portuguese bank debt, using a credit default swap, has risen in the last month.

Risk-aversion is rising in Europe RT @M_McDonough: Average European Bank 5Y CDS: pic.twitter.com/K7wPGtfCar

1.43pm BST

So, do the problems in Portugal mean the eurozone crisis has reared back into life?

I don't think so. We've not suddenly been transported to the mad days of 2011 and 2012 again.

Portugal won't spark the reemergence of crisis in EZ. Only big countries (ahem Italy, France) could shift the crisis from chronic to acute.

@vittoriodarold Some things have changed since Greece!

1.34pm BST

Concerns over Espírito Santo have also been building for a while. Last December, the Wall Street Journal flagged up that the company raised funds during 2011 by selling debt to its own investment fund.

The money was repaid, but the deal shows the potential clashes of interest that can arise with a major conglomerate.

This story by @kowsmann started the Espirito Santo mess. http://t.co/ghi6KpQPpF

1.27pm BST

Portuguese government debt has also fallen in value today, driving up the yield on its 10-year bonds to around 4%, from 3.8% yesterday. That's a three-month high.

1.25pm BST

The Portuguese worries flared up yesterday afternoon, when it emerged that conglomerate Espírito Santo International was looking to restructure some of its debt.

That sparked fears over the health of its businesses, triggering the 17% tumble in Banco Espirito Santo's shares today.

1.00pm BST

European stock markets are in retreat today, with losses across the board sparked by fears over Portugal's largest bank.

The main Portuguese stock market, the PSI 20, has tumbled by 4.5% so far today, driven down by their biggest bank, Banco Espirito Santo (BES).

BANCO ESPIRITO SANTO SHARES SUSPENDED PENDING ANNOUNCEMENT

Euro zone banking stocks -15% in the last month. Bear market territory beckons: pic.twitter.com/ZtrGbdpOzt

12.51pm BST

Allie Renison, head of Europe and Trade Policy at the Institute of Directors, reckons we shouldn't panic about Britain's widening trade gap.

While first impressions are indeed worrying, it should be pointed out that that the widening gap is down to a rise in imports, which grew by 1.7% and are a sign of robust domestic demand.

Contrary to expectations that the appreciation in sterling would lead to a reduction in the export of goods, there has been an increase of 0.6%. Indeed, when compared with the previous three months, export prices decreased by 0.8% for the three months ending in May.

12.35pm BST

The Bank of England was right to leave interest rate unchanged today, reckons Dr Gerard Lyons, economic advisor to London mayor Boris Johnson.

#Bank of England unchanged rate decision makes sense, given need to assess impact of macro prudential measures & mortgage market review.

It is about 6 years since I wrote/said Mervyn King would not raise rates in 2nd term just before his reappointment. Now tightening is near.

Assuming recent improvement in economy continues, a small tweak up in UK rates by 0.125% later this year may now make sense. Slow & gradual.

12.12pm BST

Investors are a little edgier about Greece today, after a much-anticipated bond sale drew modest demand.

The interest rate, or yield, on Greek 10-year bonds has jumped to 6.3%, from 6.1% last night. That's quite a hefty move, but it still leaves yields away from the 'danger zone' of 7%.

Order books for the bond have topped 3 billion euros, according to IFR, a Thomson Reuters service. When Greece sold a five-year bond back in April orders reached over 20 billion euros.

Bailed-out Greece is aiming to raise up to 3 billion euros from the new bond, its second bond sale after it defaulted in 2012.

Greece 3yr bond size set at EUR 1.5bln and yield 3.5% despite reports that yield was to be below 3.0%

12.03pm BST

Monetary Policy Committee Announcement July 2014 http://t.co/Qqmsetxn9R

12.01pm BST

The Bank of England has also made no change to its quantitative easing programme, and there's no accompanying statement.

12.00pm BST

To no-one's surprise, the Bank of England has left UK interest rates unchanged at 0.5%.

11.49am BST

M&S has confirmed Alan Stewart's exit as CFO - not surprisingly given where he's going, he has "already left the building", I'm told.

11.48am BST

It's official. M&S's finance chief is off to Tesco.

Here's the statement:

Marks and Spencer Group plc today announces the departure of Alan Stewart, Chief Finance Officer.

Alan has stepped down from Board and will leave M&S on a date and on terms to be agreed. The search for his successor is already underway.

11.24am BST

Marks & Spencer's troubles continue.... the word in the City is that Tesco has just poached M&S's finance director, Alan Stewart.

11:18 - TESCO CLOSE TO NAMING MARKS & SPENCER CFO ALAN STEWART AS NEW FINANCE DIRECTOR - SOURCE FAMILIAR WITH THE SITUATION

M&S FD Alan Stewart moving to Tesco is huge news. Embarrassing for M&S as comes just 2 weeks after Stewart given more responsibilities

11.20am BST

Britain's widening trade deficit is a concern, says the British Chambers of Commerce (BCC).

Chief economist David Kern is worried that the progress made narrowing the deficit earlier this year has halted:

Todays figures confirm that the pace of the UKs rebalancing towards net exports is far too slow, and if this continues we risk missing out on the Prime Ministers target of increasing exports to £1tn by 2020.

Therefore narrowing the trade deficit by providing additional support to UK exporters must remain a national priority for both the government and the MPC. On its part, the MPC must restore clarity to its forward guidance and resist calls for premature interest rate rises.

11.00am BST

UK exports to the EU have fallen by 0.9% in the last three months (if you strip out erratic items), but are up by 4.6% to the rest of the world.

That's via Christian Schulz, economist at Berenberg, who explains:

Trade growth has been more buoyant vis-à-vis the rest of the world than with Britains EU partners.

British exports are relatively price insensitive, sterling is still below pre-crisis levels vis-à-vis major trading partners currencies and global demand growth matters more than the exchange rate.

10.53am BST

Britain's widening trade gap illustrates how the UK's recovery has been driven by the domestic economy, rather than strong global demand.

And with Europe's economy still weak, it's hard to see that changing quickly.

The shortfall of exports relative to imports is the largest since January. Exports picked up slightly in the month, while imports rose at their fastest pace for almost a year.

Looking forward, we doubt that the export picture will brighten significantly, at least in the near-term. The recovery in the Eurozone economy, the UKs largest single export market, is running at only a very modest pace.

10.15am BST

And here's another chart showing how Britain's trade gap with Germany, the Netherlands and China widened in May:

10.10am BST

Britain's trade gap with the rest of the world has swelled in May, as the UK was hit by weak demand from Europe.

UK trade deficit widens to -2.418 bln pounds in May from revised -2.052 bln pounds in April pic.twitter.com/yiLLI6rQam

UK trade deficit Y/Y change in May EU: +£600m Non EU: -£100m

In the three months ending May 2014, exports of goods increased by 0.1% to £72.6 billion and imports of goods increased by 0.5% to £98.9 billion....The export of goods excluding oil and erratics increased by 0.9% to £60.6 billion; reflecting a £0.4 billion increase in exports of cars.

Imports of goods excluding oil and erratics increased by 0.2% to £83.8 billion for the same period.

9.36am BST

Wham! Two more European countries have reported that their industrial output fell in May, adding to worries about the European economy sparked by France this morning.

Italian industrial output slid by 1.2% during the month, the steepest monthly fall since November 2012. That's much worse than expected -- economists had predicted a rise of 0.2%.

What happened in May - did everyone go on holiday? German numbers bad, French numbers bad, Italy bad.

#Euro pressured by weak data. After disappointing French figs, #Italy misses as well. May Ind Output -1.2% MoM;-1.8% On Yr ~@Schuldensuehner

9.19am BST

More worrying signs for France -- its annual inflation rate has dropped to just 0.6% (on a harmonised basis)

INSEE reported that food prices were down 1.4% year-on-year, and manufactured products down 1.2%, underlining the weakness of parts of the French economy. Inflation in the service sector, though, was up 1.8%.

9.12am BST

In other corporate news, Mothercare's interim CEO has been given the job fulltime.

Mark Newton-Jones, who was parachuted into the company in March, is quite a retail veteran -- at just 25, he was a regional manager at Next covering 100+ stores, and he ran Shop Direct (including littlewoods.com), for nearly 10 years.

8.53am BST

The upturn in Britain's property sector has boosted housebuilder Barratt Developments. It posted a 8.6% jump in sales this morning, and have shareholders the welcome news that profits will hit the top end of expectations.

8.50am BST

Burberry isn't the only company fretting about the strong pound.

Associated British Foods (owner of Primark), has warned that sterling's strength will have "a negative impact" on its sales and profits from overseas businesses, particularly in Grocery and Ingredients.

8.45am BST

Shares in UK fashion chain Burberry jumped 4% in early trading, despite warning that the strong pound is still eating into its profits.

Burberry is topping the FTSE 100 after reporting a 12% surge in comparable sales in the last three months.

...demonstrates our teams' success in unlocking the benefits of these investments, as we continue to concentrate on the things we can control in an uncertain external environment.

8.19am BST

France's economy has taken another blow - with manufacturing output slumping by an alarming 2.3% in May.

Statistics body INSEE said manufacturing output fell "dramatically" during the month.

7.58am BST

Good morning, and welcome to our rolling coverage of the financial markets, the economy, eurozone and business.

A number of them thought [the spare capacity] was greater than measured by the official unemployment rate....citing, in particular, the still-high level of workers employed part time for economic reasons or the depressed labour force participation rate.

The market seems to have been positioned for a hawkish shift in sentiment. In fact, the minutes showed the Fed continues to show concern about growth rather than inflation.

#BOE rate decision at midday, expecting no change in rates at record low 0.5%...economists expect last time all 9 MPC all vote for no change

Continue reading...

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Greek Jobless Rate Still Over 27%

ATHENS—Greece's jobless rate in April was still just over 27%, unchanged from an upwardly revised figure a month earlier, showing that a recovery in the country's jobs market continues to languish despite signs the economy is inching its way out of ...

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Greek civil servants strike over layoffs, austerity

Greek civil servants launched a 24-hour strike on Wednesday to protest layoffs and grinding austerity policies that have slashed public services in the debt-ridden country.

READ THE ORIGINAL POST AT www.channelnewsasia.com

State workers strike in Greece over job cuts

Fars News AgencyState workers strike in Greece over job cutsRTE.ieWhile Greece is beginning to emerge from its protracted recession, anti-austerity sentiment remains high in the country, where repeated rounds of spending cuts and tax hikes since its rescue from bankruptcy in 2010 have driven up unemployment and ...Greek public sector workers start 24-hour strikeBBC Newsall 5 news articles »

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5 factors that are giving the US an edge over other major economies

by  Associated Press What's making US economy a world beater? 5 factors by PAUL WISEMAN, Associated Press - 5 July 2014 03:01-04:00

WASHINGTON (AP) — How does the U.S. economy do it?

Europe is floundering. China faces slower growth. Japan is struggling to sustain tentative gains.

Yet the U.S. job market is humming, and the pace of economic growth is steadily rising. Five full years after a devastating recession officially ended, the economy is finally showing the vigor that Americans have long awaited.

Last month, employers added 288,000 jobs and helped reduce the unemployment rate to 6.1 percent, the lowest since September 2008. June capped a five-month stretch of 200,000-plus job gains — the first in nearly 15 years.

After having shrunk at a 2.9 percent annual rate from January through March — largely because of a brutal winter — the U.S. economy is expected to grow at a healthy 3 percent pace the rest of the year.

Here are five reasons the United States is outpacing other major economies:

AN AGGRESSIVE CENTRAL BANK

"The Federal Reserve acted sooner and more aggressively than other central banks in keeping rates low," says Bernard Baumohl, chief global economist at the Economic Outlook Group.

In December 2008, the Fed slashed short-term interest rates to near zero and has kept them there. Ultra-low loan rates have made it easier for individuals and businesses to borrow and spend. The Fed also launched three bond-buying programs meant to reduce long-term rates.

By contrast, the European Central Bank has been slower to respond to signs of economic distress among the 18 nations that share the euro currency. The ECB actually raised rates in 2011 — the same year the eurozone sank back into recession.

It's worth keeping in mind that the Fed has two mandates: To keep prices stable and to maximize employment. The ECB has just one mandate: To guard against high inflation. The Fed was led during and after the Great Recession by Ben Bernanke, a student of the Great Depression who was determined to avoid a repeat of the 1930s' economic collapse.

Janet Yellen, who succeeded Bernanke as Fed chair this year, has continued his emphasis on nursing the U.S. economy back to health after the recession of 2007-2009 with the help of historically low rates.

STRONGER BANKS

The United States moved faster than Europe to restore its banks' health after the financial crisis of 2008-2009. The U.S. government bailed out the financial system and subjected big banks to stress tests in 2009 to reveal their financial strength. By showing the banks to be surprisingly healthy, the stress tests helped restore confidence in the U.S. financial system.

Banks gradually started lending again. European banks are only now undergoing stress tests, and the results won't be out until fall. In the meantime, Europe's banks lack confidence. They fear that other banks are holding too many bad loans and that Europe is vulnerable to another crisis. So they aren't lending much.

In the United States, overall bank lending is up nearly 4 percent in the past year. Lending to business has jumped 10 percent.

In the eurozone, lending has dropped 3.7 percent overall, according to figures from the Institute of International Finance. Lending to business is off 2.5 percent. (The U.S. figures are for the year ending in mid-June; the European figures are from May.)

A MORE FLEXIBLE ECONOMY

Economists say Japan and Europe need to undertake reforms to make their economies more flexible — more, in other words, like America's.

Europe needs to lift wage restrictions that prevent employers from cutting pay (rather than eliminating jobs) when times are bad. It could also rethink welfare and retirement programs that discourage people from working and dismantle policies that protect favored businesses and block innovative newcomers, the Organization for Economic Cooperation and Development has argued.

Prime Minister Shinzo Abe has proposed reforms meant to make the Japanese economy more competitive. He wants to expand child care so more women can work, replace small inefficient farms with more large-scale commercial farms and allow more foreign migrant workers to fill labor shortages in areas such as nursing and construction.

Yet his proposals face fierce opposition.

"Europe and Japan remain less well-positioned for durable long-term growth, as they have only recently begun to tackle their deep-rooted structural problems, and a lot remains to be done," says Eswar Prasad, a professor of trade policy at Cornell University.

China is struggling to manage a transition from an economy based on exports and often wasteful investment in real estate and factories to a sturdier but likely slower-growing economy based on more consumer spending.

LESS BUDGET-CUTTING

Weighed down by debt, many European countries took an ax to swelling budget deficits. They slashed pension benefits, raised taxes and cut civil servants' wages. The cuts devastated several European economies. They led to 27 percent unemployment in Greece, 14 percent in Portugal and 25 percent in Spain. The United States has done some budget cutting, too, and raised taxes. But U.S. austerity hasn't been anywhere near as harsh.

A ROARING STOCK MARKET

The Fed's easy-money policies ignited a world-beating U.S. stock market rally. Over the past five years, U.S. stocks have easily outpaced shares in Europe, Japan and Hong Kong. That was one of Bernanke's goals in lowering rates. He figured that miserly fixed-income rates would nudge investors into stocks in search of higher returns. Higher stock prices would then make Americans feel more confident and more willing to spend — the so-called wealth effect.

Most economists agree it's worked.

News Topics: Business, General news, Economic growth, Labor economy, Economy, Financial crisis, Central bank interest rates, National budgets, Stock prices, Employment figures, Banking and credit, Recessions and depressions, Central banking, Financial markets, Monetary policy, Economic policy, Government business and finance, Government and politics, Government policy, Government budgets, Government finance, National governments, Leading economic indicators, Financial services, Industries

People, Places and Companies: Ben Bernanke, Janet Yellen, Shinzo Abe, Europe, United States, Japan, North America, East Asia, Asia

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Markets poised for US jobs report and European Central Bank meeting

Bumper day for economic news, with the latest US non-farm payroll and the ECB's monthly press conference.

Coming up today...

American jobs report - what's expected

Greece power workers to strike against privatisation plan

8.35am BST

Shares in Balfour Beatty have slumped 10% after a disappointing trading update this morning.

design changes, project delays, rework on projects and contractual disputes on a number of projects.

8.17am BST

Greek citizens face the prospect of power cuts today, as workers at the country's Public Power Corporation begin a series of rolling blackouts.

They're protesting against the government's plans to sell off PPC, as part of its bailout programme. A bill to partly privatise the company is being debated in parliament today.

There is no danger of a blackout,

We are going on strike at all of PPCs production units and mines from Komotini to Arcadia but nobody said that all the plants would go off line at the same time. The action will be staggered because nobody wants the country to be plunged into darkness.

good morning! and here we are in #greece, waiting for the lights to go out. (literally, as figuratively we've been in darkness for a while)

8.09am BST

As usual, economists have a wide range of forecasts for how many new jobs were created across the US economy last month.

Predictions for today's non-farm payroll range from a paltry 160,000 new jobs to a rip-roaring 290,000.

That would be similar to Mays increase of 217,000 and would probably be enough to push the unemployment rate down to 6.2%, from 6.3% in May

Initial jobless claims have remained close to a seven-year low and the employment balances of most of the activity surveys have improved.

8.00am BST

Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and the eurozone.

Later today will see EU services PMIs, ECB, NFP, ISM non-manf all ahead of a US holiday tomorrow....

Continue reading...

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