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Summary

  1. Inflation may go negative, says BoE governor
  2. HSBC tax scandal "known about" since 2010
  3. EU leaders meet to discuss Greece

Live Reporting

By Ben Morris

All times stated are UK

Get involved

Ben Morris

Business Reporter

That's it for the today's Business live page. But come back tomorrow. We open from 06:00.

London property

World Service

Former US President John F Kennedy"s childhood home in London
Getty Images

One of the things we are providing in the UK is "safe haven status" says economist Roger Bootle. So that's why wealthy buyers from around the world

have snapped up property in London. But there are costs - the loss of a sense of community, the driving up of property prices. He says a more effective tax on property would mitigate the problem.

Greece debt talks

World Service

In January €11bn was taken out of Greek banks and that could accelerate further if Greeks feel that an exit from the euro is becoming more likely, says Greek-born British economist Vicky Pryce on World Business Report. If Greece leaves the euro (which she thinks is unlikely) the banks will cease to be viable, she says.

Talks between Greece and eurozone officials did not make much progress today.

'Cut Greece some slack'

World Service

Greek ministers
Getty Images

Greece's new left-wing government is not exactly popular in the halls of power in Berlin and Frankfurt amid bailout negotiations. But should Germany cut them more slack? Sony Kapoor

makes the case on Business Daily.

Greece debt talks

Irish Prime Minister Enda Kenny, right, speaks with Italian Prime Minister Matteo Renzi, left, and Greek Prime Minister Alexis Tsipras
AP

European Parliament president Martin Schulz says this about

talks over Greece: "I spoke with [Greek Prime Minister] Tsipras and other members of the Eurogroup today. I am optimistic. After these conversations, I have a feeling that the two sides are moving towards each other, as a compromise is desirable. The reason there wasn't an agreement yesterday is that the government in Athens still needs to find a common line. But I believe they'll find that line by Monday."

Market update

FTSE 100
BBC

Shares in London edged higher with the

FTSE 100 adding 9 points. The biggest winner was
Coca-Cola HBC, whose most important market is Russia. Its shares jumped more than 6% on news of a ceasefire agreement in Ukraine.
Rio Tinto closed 2.3% higher after it announced plans to return $2bn to shareholders.
Sterling rose by a cent and a half against the dollar.

'Rum state of affairs'

Radio 5 live

Robert Peston
BBC

"It is a pretty rum state of affairs," says BBC economics editor Robert Peston. "We are entering very interesting and uncharted territory

where the big risk is deflation - price falls - most of us alive today have never experienced this as a problem."

Boost for Greek banks

Radio 5 live

BBC Business reporter Rob Young says there are reports that the European Central Bank has raised the amount that Greek banks can borrow under the Emergency Liquidity Assistance Programme to €65bn.

Greek shares gyrate

Greek stock exchange
Bloomberg

You need nerves of steel to invest in the Greek stock market. The main index closed almost 7% higher today, on Wednesday it lost 4%, but on Tuesday it rose almost 8%. The moves reflect the

ebb and flow of confidence over whether Greece can reach an agreement with its international lenders.

Battle for the crown

Danish Crown
Reuters

The Danish central bank decided to keep interest rates on hold today. Many were expecting it to cut interest rates, to help ease pressure on the Danish crown. Speculators are betting that Denmark will have to break the crown's peg to the euro, rather like the Swiss had to do with the franc.

Euromoney has a good explanation of what's going on.

MPs to question HSBC & HMRC

HMRC officials were bashed by MPs on the Public Accounts Committee yesterday, now they can look forward to questions from the Treasury Committee, along with executives from HSBC. "Banks have repeatedly told the Committee that, since the crisis, they have put in place reforms to ensure that they operate on the basis of sharply improved standards. The Committee will need reassurance that they have done so in private banking," said Andrew Tyrie, chairman of the Committee.

Via Blog

Who wants a smartwatch?

Rory Cellan-Jones

Technology correspondent

Tim Cook unveils the Apple Watch, October 2014
Getty Images

I am convinced that Apple will be the giant of the smartwatch sector within a couple of months. What I'm less clear about is whether clever watches are anything more than a niche product for gadget fans and fitness addicts - unlike smartphones which are becoming essential for everyone.

Via Email

'Hopeless' Bank of England forecasts

Louise Cooper

Financial analyst, CooperCity

The Bank [of England] has a hopeless record of predicting inflation on a two and three year view. It is utterly useless at it and its forecasts have almost zero correlation with the actual outcome...

My concern is that it is very difficult to model the impact of lower oil prices. I fear the Bank may be underestimating the effect.

Market update

New York Stock Exchange
AFP

US shares are higher in early trading. The

Dow Industrials is up around 0.4%. The
S&P 500 is up 0.6%.

'Thriving' Rio Tinto

World Service

Rio Tinto chief executive Sam Walsh
BBC

It's a "fragile volatile" market, says Sam Walsh the chief executive of Rio Tinto about the commodities sector on World Business Report. But "we thrive because we are low cost". He says it costs Rio Tinto $17 to mine a tonne of iron ore, but they are selling it for $62 a tonne.

Cash for Ukraine

Ukraine flag
Reuters

Some analysts are unimpressed

with the IMF's $17.5bn loan to Ukraine. "This is not a significantly increased IMF programme and [IMF chief] Lagarde should not try and sell it as such," said Tim Ash, head of emerging markets research at Standard Bank. "The IMF is bringing $5.8bn in new money to the table."

Via Email

European Union summit

Nigel Cassidy

BBC News

Summit now delayed until 1500 GMT.

Via Email

US retail sales

Paul Ashworth

Chief US Economist, Capital Economics

"Should we be worried about the weakness of underlying [US retail] sales over the past two months? Possibly. But all the conditions are in place for a period of very strong consumption growth (massive employment gains, rising hourly wages, high consumer confidence, lower gasoline prices). We still expect to see that strength come through in the retail sales data soon."

US retail sales disappoint

US shoppers
Getty Images

US retail sales fell 0.8% in January, but that was largely due a big decline in the price of petrol.

The Commerce Department said that excluding fuel, cars, building materials and food, retail sales edged 0.1% higher - much less than economists were expecting.

Howard Mustoe

Business reporter

That's it for the morning coverage from Joe, Chris and me. We hand over to the redoubtable Ben Morris for this afternoon's live page. Stay tuned.

Expedia

Orbitz website
BBC

US online travel site Expedia is buying rival Orbitz Worldwide for about $1.6bn (£1bn), the two companies said. Expedia will shell out $12 in cash for each Orbitz share.

Coca-Cola HBC

Coke bottles
Getty Images

It's a fizzy day for Coca-Cola HBC, which puts the sweet stuff into bottles and cans for thirsty consumers in places like Russia, Ukraine and Nigeria. Shares are up more than 10% at £12.02, topping the FTSE 100 leaders' board, on the back of the ceasefire deal for Ukraine and the $17.5bn IMF loan to the troubled country. However, the stock is still a quarter lower than when it joined the London Stock Exchange in 2013 after leaving the Athens bourse, when shares were more than £19.

Tolkien the talk

Tolkien
BBC

*SPOILER ALERT* A research note from Morgan Stanley on exporting deflation has left us rather baffled. "We examine whether the ghosts of the 1930s are likely to haunt us, or be a bit more like the uneasy allies in J.R.R Tolkien's epic finale who helped Aragon turn the tide at the battle for the city of Minas Tirith", it reads. Ideas on a postcard - oh, alright then, an email if you must - please.

Via Twitter

Robert Peston

Economics editor

Greek budget shows tax revenues falling fast, 20% below target, as feared

Via Email

Rob Young

Business Presenter, BBC Radio 5 Live

On 5 live, I've spoken to Lucy O'Carroll, chief economist of Aberdeen Asset Management and a former Bank of England economist. She said: "We must be careful to distinguish between this most likely brief period of falling prices and entrenched deflation. It's not an economy that's exhibiting the kind of entrenched deflation in the eurozone."

Ryanair fights on

Ryanair
Getty Images

Never one to give up easily, Ryanair has vowed to continue its legal battle against a Competition and Markets Authority (CMA) order forcing the airline to sell most of its 29.8% stake in Aer Lingus. "Ryanair will now appeal this case to the UK Supreme Court," it said after the Court of Appeal rejected Ryanair's appeal against the CMA decision. Meanwhile, IAG's £1.4bn bid to take control of Aer Lingus remains unresolved.

Via Email

John Moylan

Industry correspondent, BBC News

When will EDF make the decision to invest in Britain's first new nuclear power plant in a generation? A "final investment decision" (FID) had been expected by the end of 2014. That was delayed until the end of the first quarter 2015. Now that deadline seems unlikely. This must raise serious questions over EDF's plan to be generating power from Hinkley Point C by the end of 2023.

Via Twitter

Simon Stone, BBC Sport

Man Utd exec vice-chair Ed Woodward: "The team is well positioned to challenge for a top four finish in the Premier League."

Manchester United results

man u
AFP

Manchester United

said revenue for the three months to December 31 fell 14% to £105.7m as broadcasting and match day revenue declined. Not making the UEFA Champions League made the dent, the club said.

Via Twitter

Kamal Ahmed

BBC Business editor

SFO confirms it is "open to discussion" with HMRC on HSBC tax evasion allegations #SwissLeaks

24 Twitters

iPhone ad
Getty Images

The day just wouldn't be complete without some mention of Apple, and the

Wall Street Journal helpfully points out that the company's market value has risen by just over 50,000% since it first listed in 1980. Its $710bn market capitalisation means Apple is worth twice as much as Google, eight times as much as McDonald's - and 24 times the value of Twitter.

Via Twitter

Robert Peston

Economics editor

Did Mark #Carney, in saying really matters UK remains important inward investment destination, almost enter debate on UK staying in EU?

Via Blog

Good or bad deflation?

Robert Peston

Economics editor

The Bank of England expects inflation to be zero or very close to zero for most of this year, starting in March. And it says there is a greater than evens chance that it will turn negative, that prices will fall, for much of this period. But the governor, Mark Carney, insists in his letter to the chancellor that this is not deflation.

Read more of BBC economics editor Robert Peston's analysis on the website.

Via Twitter

Philip Aldrick, The Times economics editor

Carney says UK bank sector exposure to Greece is "less than 2pc of common equity", ie direct impact of Grexit minimal

Via Twitter

Louise Cooper, City analyst

Wanted to also ask how many staff at #BofE shopped at Aldi or Lidl so had an idea of the pricing pressure in food! Mic taken away!!

Inflation chart

Inflation projection
Bank of England

This chart shows the Bank of England's projections for UK inflation over the coming three years, if interest rates stay at their current level (which seems unlikely). The strong red band is the Bank's best estimate.

Rate rises

Mark Carney defends charges of the Bank being opaque on its policies. He says the

Inflation Report and his
letter to the chancellor give as much clarity as they can give - the Bank will look through one-off price shocks and return inflation to target within next two years. He says this will require limited rises in interest rates over that period. It's clear that the next move will be "an increase in interest rates".

Via Twitter

Adam Parsons

Business Correspondent

Carney: Fall in oil price is "unambiguously positive". Not sure Aberdeen will agree

Good or bad deflation?

Mr Carney adds: The important point is to underscore that if we were in a situation that needs more stimulus "we have many options". Most likely moves will be rate increases.

Good or bad deflation?

Peston
BBC

Our very own Robert Peston asks the governor: If negative inflation is a good thing because it boosts spending power - how do you judge when it becomes bad deflation? Mr Carney says that the MPC would distinguish what's happening now from a "bad" deflation outcome. What's happening now is different from sustained and persistent price falls. More concentrated falls.