1 ECB signal further stimulus (BBC) The European Central Bank (ECB) has said it will provide “further stimulus” to the eurozone economy if inflation in the bloc continues to remain low. Mario Draghi, the bank’s president, said a stronger euro would act as a trigger to looser monetary policy. The rise of the single currency’s exchange rate is one of the main reasons eurozone inflation is at a dangerously low 0.5%. One of Mr Draghi’s stimulus options would be quantitative easing (QE). That is something the International Monetary Fund (IMF) has been suggesting as concerns grow about deflation in the eurozone.
Earlier this month the ECB kept interest rates steady, at a historic low of 0.25%, but Mr Draghi said its members were unanimous in their willingness to begin QE if inflation stayed well below their 2% target. Their fear is that falling inflation could harm the eurozone’s fragile economic recovery by reducing consumer spending – because people would be likely to put off purchases, believing prices will continue to fall. Low inflation also means governments and businesses find it more difficult to repay their debts.
However, most analysts believe Mr Draghi’s more likely choice would be a further cut in the ECB’s benchmark interest rate, currently at a record low of 0.25%. The bank’s policymakers recently raised the idea of cutting the rate to below zero, effectively charging banks that hold excess cash at the ECB. Such measures could be needed, Mr Draghi said, because of a euro that has strengthened by nearly 5.5% against the dollar, and by nearly 10% against the Japanese yen in the last year.
2 After slide, rich countries now lifting growth (Annie Lowrey in The New York Times) The rich countries whose property bubbles and collapsing banks plunged the world into recession in 2009 are now helping to lead the still-halting recovery out of it. That is the view from the International Monetary Fund’s latest forecast. “The recovery is strengthening,” Olivier Blanchard, the fund’s chief economist, said.
As growth has slackened in the big emerging economies, it has strengthened in rich countries, the fund said, especially in the US. It now sees the world economy as growing about 3.6 percent this year and 3.9 percent next year, up from 3 percent in 2013. That is down slightly from its early forecast in January, when it predicted the world economy would grow about 3.7 percent this year.
“For the past five years the emerging market and developing economies have been shouldering the burden of recovery, accounting for 75 percent of the increase in global growth since 2009,” said Christine Lagarde, the IMF’s managing director. “The recovery is finally becoming a bit more balanced, in an overall economic landscape that has changed significantly.” Even as the IMF stressed that things were looking up in general, it reduced some countries’ growth forecasts to account for lingering sluggishness, internal financial problems or new geopolitical strife, as in Ukraine.
Even the euro area has finally stopped contracting, the fund said, and relief from government-imposed fiscal austerity might help that growth take seed. The drag from steep government cutbacks has dropped to 0.25 percent of economic output this year, from 1 percent last year. Economists at the IMF anticipate that the euro area will grow about 1.2 percent this year and 1.5 percent next year, after having shrunk for the last two years. For the major emerging economies — including China, Latin American nations like Brazil, Middle Eastern countries and South Africa — growth should be solid, if unremarkable, the fund said.
3 When teaching turns a high-pressure job (Rebecca Ratcliffe in The Guardian) A relentless inspection regime and culture of target-setting is damaging teachers’ mental health, with many reporting stress and exhaustion, a survey by a teaching union has found. More than half (55%) of those questioned by the Association of Teachers and Lecturers in the UK say work pressures are having a detrimental effect on their mental wellbeing, while almost four in 10 have noticed a rise in mental health problems among colleagues over the past two years.
Of those teachers who did feel their job had damaged their mental health, many reported experiencing stress (80%), exhaustion (69%), disturbed sleep patterns (66%), anxiety (57%) and headaches (47%). Almost one in three said it had affected their appetite.
“Education professionals do more unpaid overtime than any other group and are put under constant intense pressure to meet targets, with excessive observation, changes in the curriculum and inspections,” the union’s general secretary, Mary Bousted said. “There are in-school pressures caused by Ofsted – pressures put upon teachers by school leaders to ensure that students demonstrate progress. There are demands for data, demands for lesson planning – it’s as though nothing is done unless it’s written down.”
4 BlaBlaCar is AirBnB of car hire (Shane Hickey in The Guardian) Frédéric Mazzella’s car-sharing company BlaBlaCar has grown to the point at which the president of SNCF, the French national railway, identified it as a competitor last year. The Paris-based company has six million members in a dozen countries, linking drivers with passengers who can buy seats. According to the company, a million people use its website every month, keying in details of where they want to go and when, and getting a list of drivers heading to the same destination, with their journey history and a price – which can be a fraction of a ticket on public transport.
Mazzella says the early years were marked by frustration as BlaBlaCar struggled to reach a critical mass of drivers and passengers who could meet each others’ demands. The turning point came in 2007 when a series of strikes crippled the French transport system. A well-timed press release to say BlaBlaCar was still open for business attracted huge media attention. Nicolas Brusson, one of the three co-founders with Mazzella and Francis Nappez, says the influx of users meant that “suddenly the service worked”. For the first time, people were saying things about the service such as “useful, interesting, low-cost, efficient”.
After that leap forward, the business continued to grow, opening an office in 2009 and hiring its first employee. Then when the Icelandic volcano Eyjafjallajökull erupted in April 2010, causing massive disruption to air travel, prices on BlaBlaCar skyrocketed. With a trip from Madrid to Paris costing €850, the founders decided to cap prices in an attempt to retain the spirit of the “sharing economy”.
The company may expand into Asia, the US and Latin America and the founders cite trains and buses as the competition, not similar services. BlaBlaCar is often compared to Airbnb, the six-year-old accommodation site that was recently reported to be in talks to raise capital in a deal valuing it at $10bn.