11.10 Tyrie has opened the floor for any further comments. Smith says she's made her broad points but would like to highlight the TUC's concern for the Chancellor's move to a seven-day waiting period for unemployed claimants. We can see no rationale for introducing this measure, she says. Cridland voices his approval of the Chancellor's spending plans, especially the plans for infrastructure spending. McWilliams says he's not convinced there is proof the Treasury will deliver on its spending plans. 11.07 The Marks and Spencer AGM is about to kick off. Retail correspondent Graham Ruddick is on the scene. 11.06 The FTSE 100 has broken through 6,500 led by its key components, miners and banks. It is now up 65.39, or 1pc, to 6,515.47. Brenda Kelly, senior market strategist at IG, said With US aluminium producer Alcoa providing a strong start to the US earnings season by beating forecasts, and the misfortunes of Greece seemingly appeased, risk appetite is back with a vengeance. The Royal Bank of Scotland is leading the charge, up 4.12pc amid rumours that minority shareholders may be able to block the chancellor's intent to cleave the bank into good and bad parts. 11.04 John Thurso moves on to the health and education ringfences. He wants to know whether it is sensible to maintain them. McWilliams says the ringfences should never have been put in place. Cridland thinks it will become increasingly difficult to protect the investment in the economy while continuing the ringfence. Meanwhile, Smith argues that the TUC does not think the NHS ringfence was properly implemented in the first place. 11.01 Now we've moved on to the merits of infrastructure spending more generally. McWilliams says he's not convinced that the cuts are sufficient to prevent another quite tough spending round after the next election. But, he says, we do believe that infrastructure spending does have a beneficial effect on the economy and we're looking for improved ways of bringing private sector money to boost spending. As far as monetary policy is concerned whether money is spent on capital or current it has the same monetary effect. But we have invested in infrastructure much less than most other comparable countries. Even countries with a lower proportion of public spending have fuond ways to spend more on infrastructure on us. 10.55 The ballooning costs of HS2 are a matter of concern for the panel. Cridland says that while the view of business is that infrastructure is crucial to economic growth and there is appetite, that it must be value for money. I find it hard to envisage in 30 years time that the UK won't have excellent rail and there's a strong case for better transport. But for HS2 to go ahead it has to wash its face. 10.49 They're now talking about regional economic development. The committee wants to know whether HS2 - the planned high speed link between London and Birmingham - is an effective way of achieving this. McWilliams says it's an "expensive way of achievieng economic growth." He thinks that developing skills and technology look better as candidates than high speed rail transport. 10.47 Discussion has moved on to employment. Nicole Smith points out that the number of workers who would like to work more hours than they're given is at a record high of more than three million. She adds that the TUC's analysis are that the jobs being created are of a poorer quality than before. Cridland says his understanding of the labour force figures show an increase in the numbers of jobs of shorter duration, zero hour contracts. We understand that in a difficult economic time that's one of the choices employers have to make, it looks like those (shorter duration employment) figures will get to a normative level higher than the recession. 10.45 On tax, McWilliams maintains that such a high top rate of tax will lose the Treasury money. He also notes that the VAT cut implemented under Alistair Darling "was actually much less of a cost to the revenue because of the stimulus to spending." Taxes at their current level are starting to damage economic activity. 10.43 On the foreign exchange markets, McWilliams says "they are a law unto themselves." I don't think that any forecaster who is realistic about his or her abilities will claim to have much certainty. I think it will depend on what happens internationally and what happens in the UK. For political reasons the process of reduction will slow in the run up to the election. Mudie presses him more - why are the markets accepting three out of five years of no action on the deficit for political reasons? Here's McWilliams again: The markets haven't fully accepted it but they're leaving us in a position which is manageable. 10.38 George Mudie asks why the markets have been so benign towards the UK despite the Chancellor pushing back his deficit reduction targets on numerous occassions. Why can the UK still borrow at relatively low rates? Here's McWilliams: The gilts market is fairly relaxed because of the scale of QE which means the government can finance its deficit. The forex market has already brought the pound down but it hasn't yet fallen in a catastrophic fashion. i think circumstances could change because it becomes clear that the deficit is not going to move very much for a couple of years. The second thing is that as QE slows down in the US the markets will cast a beadier eye on countries where they are still funding the deficit. 10.37 McWilliams goes even further than Cridland: I take a slightly different view, think it's important that we compare our view with the rapidly emerging economies that are setting the terms of the game. Hong Kong and Singapore have higher life expectancy and better infrastructure and neither spend as much as 20pc of GDP. To make tax competitive and get deficit down, spending will have to go way below 40pc and maybe down to 30pc. 10.32 Nicola Smith says she doesn't think the proportion of GDP on public spending prior to 2010 was excessive. She thinks Osborne's cuts are harmful to economic growth. Now, addressing the deficit as a result of the financial crisis is important, but the TUC disagrees with the approach the chancellor is taking and feel it is slowing growth. John Cridland disagrees. He says it's a necessary corrective for the health of the private sector for the government to reign in public finances. But he says the government should set out a longer term view of its investment plans. He says 40pc would be a healthier proportion of GDP for public sector spending, from its current level of 48pc. Ms Smith arguest that a fall in public spending of that scale would make the UK suffer the biggest fall in pubilc spending for any developed economy except Ireland and Greece. The TUC would argue that we saw strong growth in the years up to the financial crisis. The importance of addressing the public finances and the problems we have with our deficit now is separate from the proportion of GDP on public spending in the future. 10.29 Now we've got John Cridland, Director General of the Confederation of British Industry, Professor Doug McWilliams, founder, Centre for Economics and Business Research, and Nicola Smith, Head, Economic and Social Affairs Department, Trades Union Congress. 10.27 Tyrie nonetheless asks if they can give any guidance on the impact of the spending review on GDP growth. Tetlow says: I suspect the spending review's impact on growth is quite negligable. For example the split between day to day and capital spending is identical to what we heard in the budget. All they've done is say how an envelope of spending will be allocated rather than changing spending. In that extent impact on growth will be quite negligible. 10.25 Has the IFS made a forecast on growth based on the spending review. Tetlow says this is not something the IFS looks at. 10.22 Discussion has moved onto schools funding. Emmerson says school spending is "allocated in a way that is not optimal." I think it would be a good move to move to a system where two schools with similar circumstances receive the same money. The current system is very unequal so some schools would get big cuts. The current system for allocating funding looks so strange. We don't want changes to budgets overnight. Ultimately where we want to get to is schools with similar intakes get similar funding 10.19 It is as everyone suspected - no new funds for infrastructure were announced in the spending review. Gemma Tetlow confirms that the figures for capital spending remained identical between the Budget and the Spending Review. She also notes that although it's set to grow very slightly in cash terms, that the plans for capital spending actually represent a small cut in real terms. I would describe it as broadly flat, but it is falling slightly in real terms. 10.10 They've been asked about the education and health ringfences - can these stay in place? Emmerson says If you want to do the reduction on the spending side it's feasible you could protect schools and hospitals, it's the question of whether you want all the cuts on spending to go on other areas. They're clearly political choices but its likely you wouldnt want to put all the pain on public spending apart from schools and hospitals. 10.06 The Treasury Select Committee is looking at the 2013 Spending Review. Later they'll be grilling Chief Secretary to the Treasury, Danny Alexander, who announced how the budget would spend money on infrastructure. For now they're talking to Institute for Fiscal Studies directors Carl Emmerson and Gemma Tetlow. 09.48 The pound tumbled against the dollar on the string of downbeat news from the ONS this morning. It fell one cent on the news to trade at $1.4881. Pound plummets on weaker-than-expected trade and industrial trade today. 09.40 Bad news, it would appear, also comes in threes. As well as disappointing trade deficit and industrial output figures,manufacturing contracted by 0.8pc in May, well below economists' forecasts for a 0.3pc rise, according to the Office for National Statistics. 09.35 The M&S second quarter results preluded today's AGM, which is being held at Wembley Stadium. Which might give shareholders an alternative means of sparring with the board. 09.30 A spot of less bright news for the UK economy. British industrial output stayed flat in May compared with April, falling short of forecasts for a 0.2pc rise. Meanwhile, the UK trade deficit widened to hit its highest level in six months. The difference between imports and exports rose to £8.491bn, more than the £8.430bn forecast by economists. 09.27 M&S is the largest faller on the FTSE 100 this morning after it announced its eighth consecutive quarter of sales decline. The retailer is currently down 4.6, or 1pc, to 453.8p. However, the trading update was not all bad news, according to James McGregor, director of retail consultants, Retail Remedy, who said the numbers were in line with expectations and its online business was still going strong. In fairness, the General Merchandise figure isn't that bad given market conditions and M&S may even have outperformed certain other retailers. M&S should take heart from the fact that its online channel is doing so well. The future for M&S is the digital and not the twinset generation. The new online platform launching next year will only strengthen this channel. It's now all about the Autumn/Winter range. A huge amount is riding on the new range and its main challenge is to satisfy both the retailer's traditional and younger customers. 09.06 The gold price jumped this morning, picking up in response to Chinese inflation data exceeding expectations and anticipated higher inflation in the US. The commodity was up 1.6pc in early trading on Tuesday to $1,256.69/oz. Chinese inflation has rebounded to a 4 month high of 2.7pc in June from a year earlier, up from 2.1% in May. Higher pork prices, the major component of the consumer price basket, were the biggest contributor to the increase. Jonathan Sudaria at Capital Spreads, said gold was also rising after heavy falls last quarter, combined with an increase in demand for jewellery. A significant decline in gold prices of more than 20pc for the last quarter might attract physical demand (jewellery) before Diwali festival in India. That was the widespread speculation regarding the precious metal market which accompanied its rise of $14.5 to $1236.5. The chart indicates that after founding support just above $1200.00 mark, gold is now on a consolidation path. Gold price over last two days. 08.51 EU finance ministers gather in Brussels later today to discuss the economic situation in the now-28 nation bloc. On the agenda will be Latvia's adoption of the euro, which they are set to approve. Ministers will also set an exchange rate for converting the domestic currency, lats, to the euro. And at 3pm, business will be done for the day and the group can indulge in the scheduled "Euro Festivities" to celebrate Latvia's ompending membership of the single currency. 08.41 Steve Hawkes tweets that Lakeland and the BBC have clinched a dalek-table tie-up: Photo: Twitter via @steve_hawkes 08.34 European markets have also opened up in positive territory. In Germany the Dax is up 0.0.77pc In France the Cac is up 0.51pc In Spain the Ibex is up 0.93pc In Portugal the PSI 20 is up 1.03pc In Italy the FTSE Mib is up 0.51pc 08.16 We've had a tidal wave of good economic news in the last week, and now it looks like the IMF will raise its UK economic growth forecast. But Jeremy Warner remains unconvinced. So can we all breathe a sigh of relief and get back to business as usual? Not so fast, for "business as usual" may be a large part of the problem. All growth is welcome, but if there is such a thing as the wrong type of growth, the present recovery looks very much like it. Read his full piece here. 08.10 After yesterday's gains, the FTSE 100 has continued to rise, and is up 42.86, or 0.67pc, to 6,492.66 in early trading on Tuesday. US markets also performed strongly yesterday and that is expected to feed into European markets this morning. However, Michael Hewson, senior market analyst at CMC Markets, warns that any rises could be subdued due to fears over China. US markets continued their recent winning streak last night as well, and this looks like it will translate into a positive open for Europe's markets this morning, though concerns about China continue to bubble away in the background, after economic data showed that CPI inflation is starting to edge higher again, though producer prices appear to be going in the opposite direction, due to declining commodity prices. 08.08 In other corporate news, Smiths News, the newspaper and magazine distributor, has said total revenues declined 3.2pc over a 44 week period although increased 0.7pc year on year. Fastjet has said it has raised £790,000 via a draw down on its equity finance facility with Darwin Strategic, a subsidiary owned by Henderson Global Investors. And Rangers International FC has announced the departure of two directors without elaborating: "Malcolm Murry and Phil Cartmell have left the board," it has said. 08.06 As Louise Armitstead highlights in her morning City Briefing email, the Competition Commission has cleared the proposed acquisition of Britvic by AG Barr and has set a deadline of 5pm on Tuesday 30 July for AG Barr to make a bid or walk away. But Britvic at least thinks it's too late. Gerald Corbett, chairman of Britvic, has said in a statement this morning: "Britvic is in a very different position to last summer when the merger was agreed. 08.02 James McGregor, director of retail consultants Retail Remedy, agrees that while the M&S figures don't look good on the surface, they could mark a turning point for the struggling high street stalwart. 07.47 Retail correspondent Graham Ruddick reports that M&S is optimistic about the direction of travel, despite its clothing sales falling for the eighth consecutive quarter. Marks & Spencer says the performance of its clothing business is improving despite posting another fall in sales. The retailer, which will hold its annual general meeting at Wembley Stadium on Tuesday, said like-for-like sales in its clothing business fell by 1.6pc in the 13 weeks to June 29. This is the eighth consecutive quarter that M&S's clothing sales have fallen but it also represents the smallest decline over that two year period. Despite clothing sales declining, M&S said its food sale rose 1.8pc on a like-for-like basis, while international sales rose 8.7pc and online sales increased 29.9pc. Marc Bolland, chief executive, said: "Our general merchandise business showed some improvement this quarter and the food business delivered another excellent performance, continuing the strong underlying trend." In clothing, Mr Bolland said trading conditions were "difficult" and there had been a "further intensification" of promotional activity on the high street. Marc Bolland, M&S chief executive, is trying to convince investors that he is on track to turn around nearly two years of falling clothing sales. 07.33 Economics editor Philp Aldrick has more details on the IMF's changing tune on the UK economy. In a move that will be seen as a victory for the Treasury in its row with the global financial watchdog over economic policy, the IMF is likely to lift its growth forecast for this year from 0.7pc to as much as 1pc on Tuesday. A revision on that scale would cancel out the body's downgrade in April that prompted the IMF's chief economist, Olivier Blanchard, to warn the Chancellor that he was "playing with fire" and should "consider adjustment to the original fiscal plans." The comments sparked a war of words between the IMF and Treasury. It culminated in the IMF's recommendation in May that the Government borrow as much as £10bn extra this year for infrastructure projects to offset austerity. George Osborne rejected the proposal. Since then, the recovery has begun to accelerate with growth of 0.3pc in the first quarter and forecasts for 0.5pc or 0.6pc in the three months to June. In April the IMF warned the Treasury to slow the pace of fiscal consolidation. 07.27 Good news came in threes for the British economy over night, as figures signalled rising house prices, improved business confidence and steady growth in retail sales. The Royal Institution of Chartered Surveyors' house price balance jumped to +21 in June from +5 in May - the best reading since January 2010 and the biggest improvement in a single month since 2009. A survey from Deloitte showed Britain's top firms are more willing to expand than at any point over the past two years, while the British Retail Consortium reported healthy growth in sales last month. All this comes ahead of the IMF's World Economic Outlook Report which is expected to raise Britain's GDP growth forecast for this year, just months after the same organisation warned that the UK economy was too weak to withstand Chancellor George Osborne's austerity measures. The upward revision could be as much as 0.3 percentage points to 1pc from its existing 0.7pc estimate. 07.25 Meanwhile, Marks and Spencer's second quarter results are out. Our retail correspondent Graham Ruddick is digesting the figures. 07.18 Oil giant Shell has named Peter Voser's replacement. Ben van Beurden, a Shell veteran of 30 years and currently its Downstream Director, will become chief executive from next year. 07.10 Asian stocks rallied overnight, following Wall Street's rise on Monday. Aluminium producer Alcoa gave investors a bright start to the US second quarter earnings season, reporting better-than-expected results. The company, which is considered a bellwhether for the wider economy, reported a narrower second quarter loss than analysts had feared, of $119m. Inflation in China rose closer to the country's 3.5pc target in June. Consumer prices roses 2.7pc year-on-year, up from May's 2.1pc. But the headline figure masks the persistent decline of factory gate prices, which fell 2.7pc in June, the 16th consecutive month of decline. Food price increases hit an annual 4.9pc in June and remained the main driving force of inflation. 07.05 Today's business pages lead with news that business secretary Vince Cable is set to unveil the date for the Royal Mail privatisation. Andrew Tyrie, the conservative MP who chaired the Parliamentary Banking Standards Commission, has hit out at the government's bank legislation, saying it has been watered down so much "as to be virtually useless. Louise Armitstead has more details. Brussels correspondent Bruno Waterfield reports that Greece will get its next EU-IMF bailout payment of €2.5bn on condition that it implements austerity measures including deeper spending cuts and public sector lay-offs within 10 days. France's business leaders have launched a blistering attack on President François Hollande, demanding drastic measures to halt the country's industrial decline and shrink the ballooning public sector. Ambrose Evans-Pritchard reports. Steve Hawkes reports that controversial insurance "add-ons" have been attacked as little more than "profit making machines" for companies as regulators launched an investigation of the £4bn market. Andrew Tyrie, who chaired the Parliamentary Commission on Banking Standards, is disappointed with the Banking Reform Bill.