Business news and markets: as it happened, Tuesday April 8, 2014

NIESR predicts 0.9pc growth for first quarter

15.15 The National Institute of Economic and Social Research predicts that the economy grew by 0.9pc in the first quarter of the year. Here's what it has to say:

Even though the level of economic output has almost regained its pre-recession peak (January 2008), a sizeable negative output gap remains. With economic recovery still in its infancy, we do not expect the MPC to change monetary policy, via an increase in interest rates, until the middle of 2015.

New French prime minister promises tax cuts

14.45 France's new prime minister Manuel Valls is setting out his policies on taxes, among other things, as the government tries to boost France's economy (incidentally the IMF predicts growth of just 1pc in France this year).

Mr Valls says he will reduce the corporation tax rate to 28pc by 2020 and that low income workers will receive a reduction in payroll charges.

IMF: UK will be fastest growing economy in the G7 this year

14.25 Olivier Blanchard, the IMF's chief economist, is speaking following the release of the IMF's economic report. He is urging the eurozone to do more to avoid deflation, potentially introducing quantitative easing

14.00 Just announced: The International Monetary Fund reckons the UK will grow faster than the US, Germany and Japan in 2014.

The IMF has upgraded the UK's 2014 growth forecast from 2.4pc to 2.9pc.

This is the first time since 2008 that the UK has led the G7 in terms of growth predictions.

Szu Ping Chan has the full story :

The IMF upgraded its forecasts for UK growth on Tuesday by more than any other advanced economy. It said cheaper credit and increased consumer confidence had helped the UK economy to "rebound more strongly than anticipated" over the past year.

The Fund now expects Britain to grow by 2.9pc this year, from a forecast of 2.4pc in January and 1.9pc last October. By comparison, it expects the US to grow by 2.8pc in 2014 and Canada to grow by 2.3pc, making Britain the fastest growing economy in the G7.

It is the first time since April 2008 that Britain has led the G7 in terms of growth, and the IMF said output could be even higher this year than its official projection because increased confidence had "created stronger-than expected growth momentum". UK growth in 2015 was also upgraded to 2.5pc, from 2.2pc.

Greece says it's on track to return to bond market

13.05 Greek's government says it could return to the bond markets soon after a successful sale of six-month treasury bills this morning. The yield on the notes fell to 3.01pc from 3.6pc last month, and Greece is rumoured to be returning to long-term debt.

Christos Staikouras, the Greek finance minister, said the auction showed that Greece is on "a return trajectory" to bond markets.

Tech break continues into Tuesday

12.30 Traders appeared to have halted yesterday's decline in tech stocks this morning, but the market has turned into a sea of red. Compare the screenshot at 08.15 this morning to how things look now.

^Reuters

^Reuters

Online retailers are getting pummelled again, with Asos, Boohoo.com, AO World and Just-Eat all falling heavily.

The FTSE is down 0.95pc at 6,559.85.

Manufacturing data 'suggests 1pc growth in first quarter'

12.15 Martin Beck, senior economic advisor to the EY ITEM Club, says today's industrial production data suggest a very impressive rate of first quarter growth:

February’s healthy numbers for industrial output point to growth in the sector for Q1 as a whole coming at around 1pc. We expect that quarterly GDP growth could also expand at a similar rate, with the risks potentially lying to the upside. So a strong and increasingly better balanced recovery continues.

Pound jumps to highest level for almost a month

11.25 Sterling has been driven up by those manufacturing figures, which in itself could damage manufacturing exports, according to Mike Rigby, head of manufacturing at Barclays

Macro-economic factors for Manufacturers continue to be broadly favourable with optimism across most sectors on the rise. However, one area to watch is the general appreciation of sterling and the challenge this places around exports. That said, on balance, the outlook for the sector remains positive with forward looking order books looking increasingly evident.

11.10 Following that manufacturing data, the dollar value of a pound has leapt by a cent to $1.6712.

This is the highest level since March 13. Here's the movement over the last month:

^{Image: Bloomberg}

Here's Alex Edwards, head of the corporate desk at UKForex:

Both the Manufacturing and Industrial Production data printed stronger than expectations this morning. These are very impressive numbers and will serve to boost expectations for an early rate hike by the BoE, perhaps even as early as January or February next year, and certainly before the UK general election in May 2015. Although the UK PMIs were weaker than expected last week, these, too, were largely strong numbers. This data will continue to lend medium-term support to the pound, and we'll likely see a move on 1.68 in GBP before long.

FTSE remains weak, continues fall

10.50 In the wake of Monday's 1.1pc drop, the FTSE 100 remains weak and is now down 0.6pc, or 37 points, at 6,585. Renewed concerns about the Ukraine crisis have not helped market sentiment, although the sell-off in tech stocks, which characterised Monday's fall, has abated. Microchip designer ARM Holdings is up 1.3pc after declining 2.4pc a day earlier.

Treasury committee questions ABI on Budget

10.40 Mr Thoresen is asked how many people will not take an annuity.

Those with £30,000 or less are likely to take the cash and deploy it alternatively. At the higher levels I think you'll see more choose to take an annuity eventually.

There'll be cash for people with relatively small pots. At a point when you're older and you want the guarantee you move into an annuity position.

In the next 5-10 years you'll see lower levels of annuity and then as people get older, growth again.

10.35 Mr Thoresen is asked how pension sellers have reacted to the Budget - for example people that would be buying annuities now. He says they have extended "cooling off periods" - the time during which retirees have to buy an annuity.

We are hoping to make an announcement in the next couple of days on how that will play out

10.25 MP Mark Garnier how much the insurers knew about the FCA's review into pension selling before The Telegraph disclosed details of the FCA's review of policy selling .

We first heard about the plans of the regulator to carry out a systematic review in February. We were told to keep it totally confidential.

On the night before the Telegraph article we were told [about the article]. We still hadn't seen the substance of what the thematic was going to be.

10.20 Mr Tyrie moves on to the Budget's annuity reform. "Is this shock therapy?" Mr Thoresen partly blames low interest rates for low returns.

I think when it was announced it was certainly a surprise. The first aspect was the macro factors that affect the market. Those aspects create an environment where annuities are challenged at a number of levels.

The second factor is the effectiveness of the market. The industry has been working to improve levels of shopping around and levels of switching

10.10 We're off. Committee chairman Andrew Tyrie asks Mr Thoresen about the FCA blunder which saw millions wiped off insurers' shares .

If you look at the impact it had on share prices on Friday, you can see how confused the market was. This has not been helpful.

10.05 The Treasury Select Committee is gearing up to hear the thoughts of Association of British Insurers Director General Otto Thoresen on the effects of George Osborne's recent Budget, which scrapped the requirement for pensioners to buy an annuity.

We're just waiting for proceedings to start. You can follow them here .

Sports Direct falls on share sale

09.55 Back in the stock market, Monday's news that Mike Ashley was slashing his stake in Sports Direct through the sale of 25m shares has weighed on the retailer, which is down 6.4pc in early trade. Associated British Foods, the sugar to clothing conglomerate, is also off 3.6pc in the wake of a profit warning from German peer Suedzucker.

Manufacturing output smashes expectations

09.30 A big beat for manufacturing output - the sector expanded by 1pc between January and February according to data from the Office for National Statistics.

This meant 3.8pc growth compared to a year ago - the best for three years. Economists had expected a month-on-month rise of 0.3pc and a 3.1pc annual increase.

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