The Bank of England should cut interest rates, print more money and ease the regulatory pressure on banks as part of a radical set of measures to return Britain to recovery, the International Monetary Fund has urged. Warning that weak growth was putting the country at risk of permanently high unemployment, the Bretton Woods institution called for swift and co-ordinated action between the Bank and the Treasury. If the joint efforts had failed to have much effect by November, the Government should then consider cutting taxes and boosting infrastructure spending by as much as £30bn, said the IMF. In an unusually alarmist annual assessment of the UK, IMF managing director Christine Lagarde said that “growth is too slow and unemployment too high, and policies to bolster demand before low growth becomes entrenched are needed,” The Telegraph reports.
Eurozone leaders are wasting time with squabbles, piecemeal bailouts and appeals for illusory global aid while the Continent “wallows” in unending crisis, China’s top foreign investor has said in a rare outburst of frustration. Jin Liqun, the chairman of China’s $440bn sovereign wealth fund, ripped up diplomatic protocol by delivering a lascerating attack on Europe’s ineffectiveness in governance. “The debt crisis is actually much less devastating than the handling of the debt crisis,” said Mr Jin, who warned that political gridlock was driving the eurozone deeper into the woods. “Too much time has been wasted on endless bargaining on terms and conditions for piecemeal bailouts,” he said, adapting a Shakespearean quote to add: “Frailty, thy name is leadership,” writes The Times.
The German Chancellor Angela Merkel said she finds it “astonishing” that her pro-austerity stance is the cause of controversy, as Germany found itself increasingly isolated on the issue of eurobonds ahead of Wednesday’s European Union leaders summit. The German Chancellor said that the current debate in Europe and beyond “gives the impression that, for us, saving, as such, is pleasurable”. “It’s just about not spending more than you collect. It’s astonishing that this simple fact leads to such debates,” she said in a speech in Berlin. Germany has repeatedly insisted that indebted Eurozone nations including Greece and Spain must impose sweeping austerity programmes to get their finances under control, while France, Italy, the International Monetary Fund and the Organisation for Co-operation and Development are now stressing the need for pro-growth measures, according to The Telegraph.
The World Bank has cut its economic growth forecast for China this year to 8.2% and urged the country to rely on easier fiscal policy that boosts consumption rather than state investment to lift activity. In a biannual East Asia and Pacific economic update, the World Bank said a slowing China will drag growth in emerging East Asia to two-year lows this year, but warned Europe’s seething debt crisis could inflict even bigger damage if it worsens. Sluggish US and European demand and a softening Chinese property market would combine to weigh on the Chinese economy in the near term, it said. But if governments and central banks act in time to stabilise activity, economies should recover next year.
Flybe, the regional airline, is to take on a third of the European routes run by loss-making Finnish flag carrier Finnair. The two firms, which launched a joint venture last year, said yesterday that Finnair would transfer 12 Embraer aircraft, along with some 200 cabin crew, to Flybe. The UK carrier will take over the operations in October but has yet to disclose which routes will be affected. Flybe, which is run by Scots-born boss Jim French, flies from airports including Edinburgh, Bristol, Cardiff, Doncaster and East Midlands. French, who holds the posts of both chairman and chief executive, said the agreement marked “another major step” in the development of the Flybe Nordic joint venture, the Scotsman reports.
A growing number of young people are being shut out of entry-level jobs because they do not have the right skills to move from education to work, a report warns. More than 450,000 young people have been unable to make the transition from learning into work as employers have increasingly changed what it is they look for when hiring, with many under-25s in the UK unable to match the skills needed, according to a new study. The report from the Work Foundation argues that as jobs have moved from production to service-led roles over the past decade, employers increasingly require “softer” skills such as good communication or working as part of a team more than technical ability, The Telegraph says.