Daily Archives: October 20, 2011

Claire Jones

The FT’s Peter Spiegel reports today of a standoff between the ECB and the IMF over how swingeing the next round of Greek cuts should be.

Part of the reason for the delay is a standoff between two of the members of the troika – the IMF and ECB – over whether Greece can keep paying its debts without taking more stringent austerity measures. The ECB has taken a tougher line, while the IMF has urged more leniency.

Which is right? According to a paper to be presented at a St Louis Fed conference tomorrow, the ECB is when it comes to Greece. But the case is far less clear cut on whether the troika should push for such harsh cuts elsewhere. Read more

Grim. Whether it is Sir Mervyn King’s warning the recovery is off-track, inflation rising to equal a 20-year high or the new Ernst & Young Item Club forecast expecting UK growth of only 0.9 per cent this year, the word describes the current economic outlook. Hopes that Britain could show in 2011 that it was escaping the grip of the financial crisis have been dashed.

The Bank of England governor blamed the rest of Europe for Britain’s feeble recovery. “The main impediment to the strategy of rebalancing our economy is markedly slower growth in our major export markets, especially in the rest of Europe,” he said on Tuesday. By contrast, Labour frets that economic policy is repeating the historic mistake of the 1930s with “too far, too fast” deficit reduction.

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Ralph Atkins

Fittingly, at the end of a career spent managing global economic crises, Jean-Claude Trichet’s farewell party took a dramatic turn in Frankfurt late on Wednesday.

Trichet and Draghi at the Alte Oper. Image by Getty.

Trichet and Draghi at the Alte Oper. Image by Getty.

As Europe’s statesmen - including Germany’s Helmut Schmidt and France’s Valéry Giscard d’Estaing - paid tribute to the departing European Central Bank president in the city’s Alte Oper, Nicolas Sarkozy in Paris suddenly announced his intention to gatecrash the festivities. Despite his wife just giving birth, the French president jumped on a plane to Frankfurt.

As the farewell ceremony drew to a close, Mr Trichet – along with Angela Merkel, German chancellor and Mario Draghi, the new ECB president – headed for two hours of emergency talks on the latest eurozone rescue plan in a backroom in the grandiose 19th century opera house. Read more