The global economic recovery is weakening as government policies have failed to restore confidence, the International Monetary Fund has said.

It added that the risk of further deterioration in the economic outlook was "considerable" and had increased.

The IMF downgraded its estimate for global growth in 2013 to 3.6% from the 3.9% it forecast in July.

One of the biggest downgrades was to the UK economy, which the IMF expects to shrink by 0.4% this year.

This compares with its forecast of 0.2% growth in July. Next year, the UK economy should grow by 1.1%, the IMF said, down from its previous forecast of 1.4%.

The UK, French and German governments are holding talks that will decide whether the merger between defence companies BAE and EADS goes ahead.

France and Germany need to agree to conditions laid down by the UK and the two firms.

At the moment, a deal seems unlikely, according to the BBC's business editor Robert Peston.

The two companies must decide whether to ask for an extension to merger talks by 16.00 GMT on Wednesday.

Iraq has signed contracts to buy Russian arms worth $4.2bn (£2.6bn; 3.2bn euros) this year, Russian news agencies report.

Moscow, the main supplier of arms to Iraq under Saddam Hussein, thus becomes the country's second-biggest arms supplier after the US.

The new contracts were announced after talks between the two countries' prime ministers near Moscow on Tuesday.

Reports suggest attack helicopters and missiles are included in them.

The MEP, one of Britain's most senior politicians in Brussels, said that if her application to be Governor were accepted, it would be a "strong signal of change" that the City needs.

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She said that compared to the other applicants, that include Paul Tucker, deputy Governor of the Bank, Lord Turner, chairman of the FSA, and economist John Vickers, "just about everything about me is different. I'm an independent. I'm not from the Bank or the City of the Financial Services Authority.

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Ms Bowles, who said she applied for the job the day before the deadline on October 7, added: "We need a strong signal of change - change that flows through the City. The new Governor has is to restore faith in the banking system. What bigger sign of change is there than choosing a woman and an outsider?"

If you are by now thoroughly confused, you are not alone. The average historic return on the volatile equity market is central to calculations of the cost of capital and provision for future pension liabilities. But the figure has been debated for decades. The dispute is less about the underlying data than about the way you make the calculation. The question is often framed as the choice between arithmetic and geometric means. But there is no right or wrong answer. In all problems of this kind, the relevant measure is specific to the particular purpose you have in mind.

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If you can only sell an old computer at a discount to a new model, economists say the new computer is better - that is how statisticians measure the rising quality of computers. Yet it seems absurd to say that a black skirt is of better quality than a burgundy skirt, and to conclude that skirts are getting better every year because new skirts always sell at a premium to the old. But what is the difference between a skirt and a computer?

Only an economist, or a statistician, could ask that question. And yet these arcane details of index number construction make a substantial difference to our estimates of inflation and market returns. Adjustments to pensions and tax allowances and repayment of index-linked debt - issues involving billions of pounds - are affected by their resolution. Who would have thought the difference between arithmetic and geometric means could matter so much?

What happens if a large, high-income economy, burdened with high levels of debt and an overvalued, fixed exchange rate, attempts to lower the debt and regain competitiveness? This question is of current relevance, since this is the challenge confronting Italy and Spain. Yet, as a chapter in the International Monetary Fund's latest World Economic Outlook demonstrates, a relevant historical experience exists: that of the UK between the two world wars. This proves that the interaction between attempts at "internal devaluations" and the dynamics of debt are potentially lethal. Moreover, the plight of Italy and Spain is, in many ways, worse than the UK's was. The latter, after all, could go off the gold standard; exit from the eurozone is far harder. Again, the UK had a central bank able and willing to reduce interest rates. The European Central Bank may not be able and willing to do the same for Italy and Spain.

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So how did this commitment to fiscal famine and monetary necrophilia work? Badly. In 1938, real output was hardly above the level of 1918, with growth averaging 0.5 per cent a year. This was not just because of the Depression. Real output in 1928 was also lower than in 1918. Exports were persistently weak and unemployment persistently elevated. High unemployment was the mechanism for driving nominal and real wages down. But wages are never just another price. The aim was to break organised labour. These policies resulted in the general strike of 1926. They spread a bitterness that lasted decades after the second world war.

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Nevertheless, this is an extremely useful study, not least for bringing out the lessons of the UK's interwar experience for the eurozone today. There is a high risk that the combination of tight fiscal policies with stringent monetary conditions will push Italy and Spain into debt traps via the interaction of high interest rates with low growth. At least the UK retained control over monetary conditions: in the end, it went off gold and lowered interest rates. Members of the eurozone do not have those painless options. But fiscal austerity and efforts to lower wages in countries suffering from monetary strangulation could break societies, governments and even states. Without greater solidarity, the story is unlikely to end well.

The so-called "Lagarde List" -  the name given by the Greek press to a list containing 1,991 names of wealthy, Swiss-bank-account-possessing Greeks who are being investigated for corruption and tax evasion - is causing a major stir in Greece right now.

Since Friday, two men suspected to be on the list have turned up dead in apparent suicides.

The "Lagarde List" has not been made public, so there is no way to say for sure at present whether Tzanis, Sbokos, or Kambouroglou's names actually appear on the list. However, the timeline of events is striking, and all are tied to past deals between the defense industry and the Greek government.

Meanwhile, the "Lagarde List" doesn't just contain names of Greek tax evaders. It's a list of closer to 22,000 names of wealthy people from various EU member states with Swiss bank accounts. The implication is that wealthy elites from other countries could be revealed in a corruption probe as well.

This is all starting to blow up during a crucial moment for Greece as it tries to come to an agreement with the troika over additional spending cuts and German chancellor Angela Merkel visits Samaras tomorrow in Athens.