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Investors see ECB abandoning monetary tightening policy

Most investors also expect the ECB to announce an expansion of its bond-buying programme

Global stock markets are pinning their hopes on the European Central Bank, expecting it to give up plans to tighten monetary policy and take decisive steps to stop the eurozone crisis from spreading to larger economies such as Spain.

Most investors also expect the ECB to announce an expansion of its bond-buying programme.

However, speaking at a hearing of the economic and monetary affairs committee of the European parliament in Brussels on Tuesday, ECB president Jean-Claude Trichet refrained from commenting on the bond-purchase programme but said it was "ongoing" and that the governing council would make decisions on its future path.

Nevertheless, the remarks were interpreted by some as a signal that the central bank is prepared to step up its bond purchases. So far it has spent 67bn euros (£56bn) on purchasing government bonds.

The euro posted its biggest one-day rise in more than a month on Wednesday while the German Dax added 2.7 per cent, the FTSE 100 was up 2 per cent and the CAC 40 in Paris rose 1.6 per cent.

World stocks rose, pushing markets up by an average 2 per cent to recover some of the losses registered following the €85bn bailout of the Irish economy.

Global investor sentiment has also been cheered by reports that the US government is prepared to allow more International Monetary Fund money to be used to help indebted eurozone countries.

David Cameron shows Labour how to do it

Leftwing rhetoric masked rightwing reality in Cameron's conference speech.

“The tanks are in the kitchen,” was the gloomy verdict of one Labour staffer to a speech in which the Prime Minister roamed freely into traditional left-wing territory.

But don’t be fooled: David Cameron is still the leader of an incredibly right-wing government for all the liberal-left applause lines.

He gave a very moving account of the difficulties faced by careleavers: but it is his government that is denying careleavers the right to claim housing benefit after they turn 22.

He made a powerful case for expanding home ownership: but his proposed solution is a bung for buy-to-let boomers and dual-earner childless couples, the only working-age demographic to do better under Cameron than under Labour.

On policy, he made just one real concession to the left: he stuck to his guns on equal rights and continued his government’s assault on the ridiculous abuse of stop-and-search. Neither of these are small issues, and they are a world away from the Conservative party before Cameron – but they also don’t cost anything.

In exchange for a few warm words, Cameron will get the breathing space to implement a true-blue Conservative agenda, with an ever-shrinking state for most of Britain, accompanied by largesse for well-heeled pensioners, yuppie couples, and small traders.

But in doing so, he gave Labour a lesson in what they must do to win again. Policy-wise,it is Labour – with their plans to put rocketboosters under the number of new housing units built – who have the better plan to spread home ownership than Cameron’s marginal solutions. But last week, John McDonnelll focussed on the 100,000 children in temporary accomodation. They are undoubtedly the biggest and most deserving victims of Britain’s increasingly dysfunctional housing market. But Labour can’t get a Commons majority – or even win enough seats to form a minority government – if they only talk about why their policies are right for the poor. They can’t even get a majority of votes from the poor that way.

What’s the answer to Britain’s housing crisis? It’s more housebuilding, including more social housing. Labour can do what Cameron did today in Manchester – and deliver radical policy with moderate rhetoric, or they can lose.

But perhaps, if Cameron feels like the wrong role model, they could learn from a poster at the People’s History Museum, taken not from Labour’s Blairite triumphs or even the 1960s, but from 1945: “Everyone – yes, everyone – will be better off under a Labour government”.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.