Business this week

Alexis Tsipras, Greece’s prime minister, called a referendum on whether to accept conditions set by the country’s creditors. The country’s bail-out programme expired and it failed to make a €1.5 billion ($1.7 billion) payment to the International Monetary Fund. At one point, Mr Tsipras seemed to tell the country’s creditors that he would be willing to accept much of the bail-out deal offered last week. But European officials said the original terms were no longer on the table, and that new negotiations must await the results of the referendum, scheduled for July 5th. See here and here.

New figures revealed that annual inflation in the euro area fell in June to 0.2% from 0.3% in the previous month. Although the European Central Bank launched a programme of quantitative easing earlier this year, inflation still shows little sign of reaching its official target of 2%.

The Bank of England launched the latest edition of its twice-yearly financial-stability report. It is worried about the risks of Grexit and about China’s economy. Similar concerns prompted Sweden’s Riksbank to cut its benchmark interest rate by a tenth of a percentage point.

China eased monetary policy, in part to help prop up the country’s tumbling stockmarkets. The People’s Bank of China trimmed interest rates by a quarter of a percentage point, the fourth cut since November. It also reduced banks’ reserve requirements in an attempt to boost lending. And China’s Securities Regulatory Commission lowered transaction fees and relaxed collateral rules on borrowing to fund share purchases. But there was little sign of markets stabilising: stocks in Shanghai and Shenzhen have lost nearly 25% of their value since the middle of June. See article.

Sir, can I have some more?

Alejandro García Padilla, the governor of Puerto Rico, an American territory in the Caribbean, admitted that its debts were unpayable. A faltering economy has made it harder for the island to service its debts of $72 billion. See article.

The Bombay High Court ruled that Nestlé, a multinational food manufacturer, could export its Maggi brand of noodles from India. A food-standards agency in Uttar Pradesh state had previously found a sample of its noodles had excessive levels of lead and monosodium glutamate, a claim that Nestlé disputes. But a ban on local sales remains in place—at least for now. See article.

Barack Obama announced that from next year American workers with annual salaries of up to $50,400 would be entitled to overtime pay if they work more than 40 hours a week. The current threshold is just $23,660. Mr Obama hopes that his plan will help 5m workers, a figure that his opponents dispute. See article.

Hard times

Petrobras, Brazil’s state-controlled oil giant, announced plans to slash its capital-expenditure programme for the next five years by 37%, to $130 billion. The firm, which has recently been plagued by a corruption scandal, cut its output forecast for 2020 from 4.2m to 2.8m barrels a day.

The charter of America’s Export-Import bank expired for the first time in its 81-year history. It was originally opened in 1934 to offer exporters government-subsidised trade credit, to help America out of the Depression. But many politicians now see this as coddling big business, and distorting economic growth. Although conservatives oppose renewing its charter, Mr Obama hopes that it will receive a new mandate from Congress this autumn.

Who will buy

Japan Post announced plans to float itself, and its banking and insurance subsidiaries, on Tokyo’s stock exchange. The government hopes the sale will eventually raise ¥4 trillion ($33 billion) to help finance earthquake-reconstruction projects. It will be the biggest sale of shares by a state-owned enterprise in Japan since 1987.

Restructuring plans by General Electric, America’s best-known conglomerate, hit turbulence. The American government filed a lawsuit trying to stop Electrolux, a Swedish firm, buying GE’s domestic-appliances business on antitrust concerns. But GE did sell its European lending arm to Sumitomo Mitsui Financial Group for $2.2 billion.

China launched the Asian Infrastructure Investment Bank. More than 50 countries have so far signed up to the new international financial institution, which is intended to rival the Asian Development Bank. But America and Japan have refused to join.

America’s Department of Justice launched an investigation into possible collusion in the airline industry. Although the price of jet fuel—the industry’s biggest cost—has dropped over the past year, fares have remained high.