Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Growth worries are weighing on the markets again today, as the International Monetary Fund warns that the global economy remains fragile.
The IMF, whose spring meetings with the World Bank begin in Washington this week, is worried that the global economic expansion is slowing — and vulnerable to a painful slump.
As Tobias Adrian, head of the IMF’s monetary and capital markets department, put it:
“After years of economic expansion, global growth is slowing, sparking concerns about a deeper downturn.”
IMF chief economist Gita Gopinath warned that a plethora of risks could drag growth lower this year, from trade wars to a Chinese ‘hard landing’.
Tensions in trade policy could flare up again and play out in other areas (such as the auto industry), with large disruptions to global supply chains. Growth in systemic economies such as the euro area and China may surprise on the downside, and the risks surrounding Brexit remain heightened.
A deterioration in market sentiment could rapidly tighten financing conditions in an environment of large private and public sector debt in many countries, including sovereign-bank doom loop risks.
Gopinath called for politicians to consider launching synchronised fiscal stimulus measures if these risks materialise — rather than simply rely on central banks to bail them out again.
The Fund also warned that central bankers are risking a new financial crisis by pumping up short-term growth rates:
America’s central bank, the Federal Reserve, also struck a cautious tone overnight. The minutes of its latest meeting showed that policymakers see “significant uncertainties” as they try to juggle monetary policy.
Asian markets have fallen in response, with China’s main markets down 1.7% in late trading.
We’ll hear more from the IMF today, when managing director Christine Lagarde holds a press conference to formally open its Spring Meeting in Washington.
Also coming up today
When UK business leaders and City investors went to bed last night, they couldn’t be quite certain that Britain wouldn’t crash out of the European Union on Friday. Today, they’ve woken up to the news that Brexit has been delayed until Halloween…..and possibly longer still.
After talking long into the night, EU leaders agreed to offer the UK an extension on article 50 until 31 October; an offer Theresa May grasped firmly.
Britain will also be tested on its progress in June, and there’s still a chance that Brexit could happen earlier if parliament passes the Withdrawal Bill.
Brexit pushed business leaders to the end of their tether some months ago, so there’s no appetite for yet more uncertainty.
Carolyn Fairbairn, CBI Director-General, is pleading with Westminster to end the crisis.
“This new extension means that an imminent economic crisis has been averted, but it needs to mark a fresh start. More of the same will just mean more chaos this autumn.
“Businesses will today be adjusting their no deal plans, not cancelling them.
“For the good of jobs and communities across the country, all political leaders must use the time well. Sincere cross-party collaboration must happen now to end this crisis.”
- 1.30pm BST: US weekly jobless figures
- 2.30pm BST: IMF managing director Christine Lagarde holds press conference