Morning Market Roundup: IMF Looks to U.K. For Help, Spain’s Academics Protest, Italy Digs up $38B

Here’s what’s important in the business world this morning:

IMF: The International Monetary Fund has issued a tough assessment of U.K. economic policy, urging the coalition government and Bank of England to do more to boost demand in the economy.

The IMF’s report of its latest consultation with British authorities released Tuesday called for more stimulus, either through further rounds of quantitative easing or by a further cut in the all-time low base lending rate of 0.5 percent.

Since coming to power in 2010, the U.K.‘s coalition government has introduced an extensive austerity program of state spending cuts and reforms aimed at bringing down the country’s deficit. However, as the IMF report states, that while the U.K. has “made substantial progress toward achieving a more sustainable budgetary position”, the country has fallen back into recession and “the hand-off from public to private demand-led growth has not fully materialized.”

The Bank of England, meanwhile, has been working to keep inflation – which halts income growth and squeezes household spending – down to a target 2 per cent. Latest figures released Tuesday show that consumer price inflation fell from 3.5 percent in March to 3 percent in April, a bigger drop than expected.

The BoE has also paused in its program of quantitative easing – buying high-quality assets to free up the flow of money in the economy – after spending 325 billion pounds ($513 billion) to support the economy.

Spain & Academia: Teachers and students from every level of Spain’s education system went on strike Tuesday to protest wide-ranging government spending cuts, erecting makeshift tombs at university campuses to symbolize what they claim will be the death of the country’s schooling system.

Union officials said on average 80 percent of the country’s teachers took part. All but three of Spain’s 17 regions participated in the stoppage, the biggest in a series of strikes so far this year that had until now been scattered around the country.

University students listen to a speaker at a student’s meeting before a demonstration against education cuts in Madrid Tuesday May 22, 2012. (AP Photo/Paul White)

The Education Ministry, however, claimed participation was much lower, at 19 percent, and praised teachers that did show up for work.

Spain’s government is pushing through painful austerity measures to heal public finances, which risk being overwhelmed by the costs of helping a troubled banking sector. Investors fear Spain might eventually need a bailout like Greece, Ireland and Portugal.

Italy Digs up $38B: The Italian government is to free up to (EURO)30 billion ($38.25 billion) to make overdue payments to businesses that have supplied goods or services to state institutions.

Prime Minister Mario Monti said the measures will `’give fuel” to businesses and go some way to relaunch Italy’s stagnant economy.

Delayed government payments are a major contributing factor to liquidity shortages faced by many small and medium-sized Italian companies. Analysts say payments are routinely delayed for two to three years, even longer in the health sector, with no interest due the creditor. Reduced turnover in the recession means many businesses have trouble paying even small debts.

The decrees approved Tuesday in Rome would require payment within 60 days, Monti said, acknowledging the habitual delays have been a `’big problem for Italian businesses.”

Stocks UP on EU Summit: Stocks advanced Tuesday ahead of a summit of European leaders that’s expected to be dominated by calls to boost economic growth across the continent, though ongoing worries over the upcoming Greek election kept the rally in check.

Europe remains the focus of attention across all financial markets in the run-up to the June 17 Greek election that could go a long way to determining the country’s membership of the euro as well as the future of the single currency zone.

On Wednesday, the leaders of the 27 European Union countries will hold an informal meeting in Brussels. The summit is expected to focus on ways to kick start the region’s faltering economy.

Olympics: One day, the small espresso shop near the site of the London Games was the “Olympic” cafe. The next day, it was the “Lympic.”

So where did the “O” go?

The manager won’t say. But it’s more than likely the small business became another casualty in the battle against guerrilla marketers – advertisers who try to associate their products with a prestigious event without paying to be sponsors.

Protecting the Olympic brand is always a big job, and never more so than this year. Olympic organizers say the increasing sophistication of guerrilla marketers and the rise of social media are putting the five rings under assault in ways barely envisioned a decade ago.

That means action against anyone who infringes the Olympic brand or sponsors’ deals – no matter how small.

The Associated Press contributed to this report.