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Inflation falls in UK and eurozone amid Covid-19 lockdowns as global trade tumbles – business live

Rolling coverage of the latest economic and financial news, as UK inflation hits its lowest level since 2016

12.29pm BST

The Bank of England’s new governor, Andrew Bailey, must write to the UK chancellor to explain why inflation is just 0.8%, far from its target of 2%.

But what might he say? Our economics editor Larry Elliott has some ideas:

He might start by saying that the shuttering of much of the economy meant the April inflation rate had to include a bit of informed guesswork on the part of the Office for National Statistics (ONS) – because the usual field surveys that go into collecting prices were impossible during lockdown – but that the main reason for the drop in inflation was the collapse in oil prices, owing to a mismatch between global demand and supply.

But Bailey will also tell Sunak that underlying inflationary pressures are also weak. Clothing prices fell sharply because retailers were desperate to get rid of excess stock. The cost of travel goods were also down because nobody is travelling.

Related: What will Bank governor say to chancellor about inflation drop?

12.14pm BST

Greece’s finance minister has warned that its economy will probably shrink by at least 10% this year.

The Covid-19 pandemic is crushing Athens’ hopes of economic recovery in 2020, after years of extremely painful austerity. PM Kyriakos Mitsotakis is expected to outline his plans to revive the economy later today.

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Greece’s economy may shrink 10 to 13% this year following a lockdown imposed to stem the spread of the novel coronavirus, but the government will take steps to mitigate the impact, the country’s finance minister said on Wednesday.

Finance Minister Christos Staikouras told Greek radio Real FM that the economy, which emerged from a decade-long debt crisis and three international bailouts in 2018, can withstand a possible second wave of infections in autumn.

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