IMF urges eurozone to start Greek debt relief talks
Christine Lagarde is losing patience with eurozone finance ministers.
The head of the International Monetary Fund has written to all 19 of them urging them to immediately start talks on providing debt relief for Greece, or risk losing the support of the IMF for a Greek package.
In the letter - seen by the FT’s Peter Spiegel - Lagarde writes:
We believe that specific [economic reform] measures, debt restructuring, and financing must now be discussed contemporaneously.
For us to support Greece with a new IMF arrangement, it is essential that the financing and debt relief from Greece’s European partners are based on fiscal targets that are realistic because they are supported by credible measures to reach them.
Lagarde issued the warning as talks between Greece and its eurozone partners on a package of reforms appear to have stalled.
Last month, finance ministers told Athens they wanted to see €3bn (£2.4bn) of specific contingency reforms in place - as an insurance policy in the event that main reform measures did not go far enough to allow Greece to make its repayments - before releasing more funds.
But no agreement has been reached on contingencies, and the IMF wants debt relief to be included in the talks immediately.
Last day in #Brussels, 1 last #Greece scoop: @Lagarde letter to all EZ finmins last nite urges immediate debt talks: https://t.co/j2jQtbgUh2
— Peter Spiegel (@SpiegelPeter) May 6, 2016
European markets are still down ahead of the US payrolls...
Spain: industrial production rebounds
Some upbeat figures from Spain earlier.
Industrial production rose 1.2% in March, rebounding from a 0.3% drop in February and the best performance since 2014.
It was much better than expected - economists had forecast a smaller 0.3% increase.
On an annual basis, industrial output increased 2.8% in March.
#Spain Industrial Production year-on-year at 2.8% https://t.co/yRJLumRps5 pic.twitter.com/FQNUYjoYsW
— Trading Economics (@tEconomics) May 6, 2016
Updated
Howard Archer, chief UK economist at IHS Global Insight, says this morning’s car figures show resilience but there are also signs that consumers are becoming concerned about the economic outlook:
New car sales were pretty resilient in April, in contrast to the weakened performance seen in many other sectors of the economy.
A modest dip in private sector car sales may well be the consequence of consumers becoming more wary about buying big ticket items due to increased concerns over the economic outlook and a recent dilution of purchasing power compared to the peak levels of 2015.
Over the longer term, much will obviously depend on how earnings growth develops, given that employers have been using prolonged negligible inflation as a reason to award modest pay increases. Also important is whether the labour market can regain momentum after the EU referendum.
The best-selling cars in the UK in April:
UK new car sales rise 2% in April
New car sales rose again in April, up 2% compared with a year earlier.
A total of 189,505 new cars were sold last month - the largest number for the month of April in 13 years according to the Society of Motor Manufacturers and Traders.
The increase was driven by fleet and business sales, up 6.1% and 2.8% respectively. Sales to individuals however fell 2.5%.
It followed a very strong March, when 518,000 new cars were registered, making it the second-biggest month on record.
April’s numbers take the total number of new cars sold in 2016 so far to 961,285, 4.4% ahead of this time last year.
Mike Hawes, SMMT’s chief executive, reiterated his point that greater-than-usual uncertainty lies ahead for the car market in the months ahead, as the UK goes to the polls on EU membership.
After such a strong March, April’s steadier performance was to be anticipated, and is in line with our expectations for the year.
Consumer confidence remains high as buyers continue to capitalise on attractive finance deals, although this could be affected by political and economic uncertainty in the coming months.
BHS row: Green calls for MP to step down from inquiry
Sir Philip Green, the billionaire former owner of BHS, has called for the resignation of MP Frank Field as head of the parliamentary investigation into the retailer’s demise.
The entrepreneur has accused Field of being “prejudiced” against him.
Green sold BHS for £1 a year ago to a group of little-known investors. Last week the retail chain collapsed into administration putting 11,000 jobs at risk and leaving the company with a £571m pensions black hole.
As chairman of the work and pensions committee, Field is leading the parliamentary inquiry (due to begin on Monday) into what went wrong at BHS.
Field told the Financial Times on Thursday that Green should “make good” the pension scheme by paying off the deficit, or lose his knighthood:
I feel that Philip Green has a moral duty to make good the pension scheme and if he doesn’t, while I can’t speak for the committee as a whole, I personally would recommend he should lose his knighthood.
Sir Philip is a master of bullying but he will find that parliament isn’t for being bullied.
Green described the comments as an “outrageous outburst” and called for Field to step down:
Clearly he has made his decision as to what he feels the punishment should be without even hearing any evidence from anybody about BHS or the circumstances of the last 15 years.
I think Mr Field needs to stand down from the inquiry immediately as he is clearly prejudiced.
Investors are particularly nervous about the US payrolls report today following other worrying signals that the labour market is weakening in the world’s largest economy.
A study published on Thursday showed the number of US workers laid off last month jumped, hitting the highest level for an April in seven years.
Meanwhile the US Labor Department said the number of Americans making new claims for unemployment benefits rose 17,000 to 274,000 last week - the largest increase since February last year.
Economists had forecast a smaller number of around 260,000.
Oil prices are also falling this morning.
Brent crude oil is down 0.5% at $44.77 a barrel.
European markets open lower
The cautious sentiment has spread to Europe, with markets opening lower across the board this morning.
The FTSE 100 is down 0.7% at 6,076.
Germany’s DAX is down 0.5%, the French CAC is down 0.7%.
In Spain the IBEX is down 0.4%, while Italy’s FTSE MIB is down 0.2%.
Asian markets hit one-month low
Shares in Asia have fallen, hitting one-month lows as fears over the US jobs recovery and the wider economy take their toll.
Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management”
Recent global economic data and some corporate earnings from major Western firms have been lackluster, leading to risk-off trading in markets.
Japan’s Nikkei Index fell 0.25%.
In China, the Shanghai Composite Index fell 2.2%, while Hong Kong’s Hang Seng was down 1.2%.
Markets await US payrolls report
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The big news item on the agenda today is the US payrolls report for April, published at 13.30 UK time.
Economists and investors are nervous about this one. The headline non-farm payrolls figure is expected to show 202,000 jobs were created in April, fewer than the 215,000 created in March.
A softer US jobs market would only add to fears of a wider slowdown, and investors are fearful that the number today could be even lower, as Michael Hewson from CMC Markets explains:
Expectations around today’s number are for 200k new jobs to be added for April, down from 215k in March, which would be more in line with the better than expected ISM non-manufacturing report which came out on Wednesday.
That saw a decent rise in the employment component, with the unemployment rate remaining steady at 5%, but there does appear to be an undercurrent of concern that suggests we could see a miss to the downside.
European markets are on course to end the week down for a second week, as concerns persists over the state of the global economy. Markets are expected to open lower:
Our European opening calls:$FTSE 6108 down 9
— IGSquawk (@IGSquawk) May 6, 2016
$DAX 9818 down 34
$CAC 4294 down 26$IBEX 8672 down 17$MIB 17877 down 47
