Eurozone is doomed, warns Bank of England ex-governor – business live

All the day’s economic and financial news, as Mervyn King says that eurozone countries must leave the euro to escape “crushing austerity and mass unemployment”

King: Eurozone is “extraordinarily dangerous”
Greece needs cheaper currency, less debtWhy Germany could quit the euro

8.46am GMT

European stock markets have opened lower, amid disappointment that the world’s top finance ministers didn’t announce any concrete measures at their meeting last week.

In London, the FTSE 100 has shed 38 points, or 0.6%, to 6057 points.

Markets are kicking off the last trading day of February on a rather downbeat note with the weekend’s G20 meeting of finance ministers in Shanghai almost appearing to have muddied the waters, rather than provided any clarity.

Policymakers appear to be in agreement that they need to act in a coordinated manner, but given the reactions we’ve seen so far, that certainly doesn’t appear to be the case.

Related: UK officials ‘instigated G20 Brexit warning’

8.21am GMT

Merkin King also warns that Greece needs debt relief and a cheaper currency:

As he puts it:

It is evident, as it has been for a very long while, that the only way forward for Greece is to default on (or be forgiven) a substantial proportion of its debt burden and to devalue its currency so that exports and the substitution of domestic products for imports can compensate for the depressing effects of the fiscal contraction imposed to date.

“It is evident that the only way forward for Greece is to default […] and to devalue its currency.” M’kayy Mervyn King.

I liked it better when Mervyn King was boring.

8.19am GMT

The Chinese stock market has closed at its lowest level in a month, as fears over the global economy dogged trading floors again.

At one stage, the Shanghai Composite was heading for a 15-month low, before finishing down 2.8%.

[Finance ministers delivered an]….admission of downside growth risks but no tangible commitments to fiscal policy action in particular to bolster growth in the short term”

China’s stocks hit 15-month low after only vague G20 commitments on growth https://t.co/wbdfbSUjPG pic.twitter.com/LjEmJZX6bb

8.18am GMT

As a devoted Aston Villa fan, Lord Mervyn King must have relegation on the brain right now.

EG: I simply don’t understand the case for “temporary” Euro exit. Huge invite to speculative attack. Either it’s irreversible or it isn’t.

8.10am GMT

Ambrose Evans-Pritchard, the Telegraph’s international business editor, reckons King’s intervention is very significant.

This is huge. Nobody has more credibility than Mervyn King. If Otmar Issing joins him, walls will come crashing down https://t.co/CU3rRmehed

7.56am GMT

Lord King also suggests that Germany, rather than Greece, might pull the trigger on the eurozone.

He writes:

Germany faces a terrible choice. Should it support the weaker brethren in the euro area at great and unending cost to its taxpayers, or should it call a halt to the project of monetary union across the whole of Europe?

The attempt to find a middle course is not working. One day, German voters may rebel against the losses imposed on them by the need to support their weaker brethren, and undoubtedly the easiest way to divide the euro area would be for Germany itself to exit.

7.47am GMT

Mervyn King, the former governor of the Bank of England, has fired a fierce broadside at the eurozone – claiming the single currency block may be doomed.

“Monetary union has created a conflict between a centralised elite on the one hand, and the forces of democracy at the national level on the other. This is extraordinarily dangerous.”

The more likely cause of a break- up of the euro area is that voters in the south will tire of the grinding and relentless burden of mass unemployment and the emigration of talented young people. The counter-argument – that exit from the euro area would lead to chaos, falls in living standards and continuing uncertainty about the survival of the currency union – has real weight.

If the members of the euro decide to hang together, the burden of servicing external debts may become too great to remain consistent with political stability.

7.24am GMT

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

It may be February 29th, but investors aren’t exactly leaping for joy this morning. Asian markets are falling, and European bourses are likely to follow suit.

Down day ahead…disappointment on no coordinated action from #G20 pic.twitter.com/O1umxtseE7

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Where’s the best place to start a business?

Deciding where to base your enterprise can affect its chances of success. From funding opportunities to local talent, we look at the cities that come out on top

When it comes to startup survival rates, Cambridge is the best town or city in the UK with 49.4% of businesses still going after five years. Manchester is the worst according to this rating with just 35.9% of startups still in business after this time. This could be down to two factors, says Chris Haley, head of startups at innovation charity Nesta: the supportive networks found in a relatively small city and the type of startups. “Some of the startups [founded in Cambridge, which has specialities in science, technology and medicine] could have raised a lot of funds that enabled them to keep going for four to five years, whereas others have raised small rounds.

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UK policymaking ‘jeopardised by rubbish official statistics’

Treasury select committee chair Andrew Tyrie calls for shakeup of Office for National Statistics

Andrew Tyrie, chairman of the Treasury select committee, has called for sweeping changes to how the UK produces official statistics to improve the quality of economic data.

Chancellor George Osborne should use March’s budget to launch a shakeup of the Office for National Statistics (ONS), urged Tyrie, who recently criticised the body for falling behind its international peers and jeopardising policy decisions with “rubbish” statistics.

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Millions of UK workers stuck in wrong job, study shows

Resolution Foundation thinktank says 5m extra hours a week are needed to free up part-time roles for new entrants and the economically inactive

Millions of UK workers are stuck in the wrong job or working fewer hours than they would like, according to a report warning that this army of underemployed people are blocking opportunities for those outside the labour market.

The Resolution Foundation thinktank said that 5m extra hours of work a week are needed to soak up employees’ demands for more work. Moving those underemployed into longer hours would free up their part-time roles for new entrants, including those currently defined as economically inactive – many of whom have health problems or caring responsibilities.

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If Britain voted to leave the EU, what would happen next?

Brexiters play down the difficulties of renegotiating trade and other deals, but the process of withdrawal could take years

For the first half century of its existence, joining the club of nations that became the European Union was, in legal terms at least, forever. Once inside, there was no way out.

But the Lisbon Treaty, which came into force in 2009 to streamline the EU’s working practices after it had expanded to include the former communist states of eastern Europe, also signposted the exit for the first time.

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Succinct Summations of Week’s Event’s 2.26.16

Succinct Summations for the week ending February 26th, 2016

Positives:

Real GDP rose 1%, a 0.3% increase from the original estimate.
Personal income and consumer spending both rose 0.5% m/o/m.
Durable goods rose 4.9% m/o/m (ex-transportation they rose 1.8%).
Existing home sales rose 0.4% to a 5.47 million annualized rate, above the 5.32 million expected.
Case-Shiller HPI rose 0.8% in December, and 5.7% y/o/y.
Jobless claims rose 10k, but the 4 week average remains very low at 272k.
Bloomberg’s consumer comfort index holds steady at 44.2.
Consumer sentiment came in at 91.7, up from 91 previously.

Negatives:

PMI services flash fell to 49.8, down from 53.7 previously and the worst reading since October 2013.
Consumer confidence fell to 92.2, down from 97.8 previously and below the 97.2 expected.
PMI Manufacturing Index Flash came in at 51, the lowest reading in three years.
MBA mortgage composite index fell 4.3% w/o/w and refinances fell 8%.
New home sales fell to an annualized 494k, below the 520k expected.

Thanks, Mike!

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