Economics | The Guardian

Rolling coverage of the latest economic and financial news, as Evoke decides to undertake a review of the Company's strategic optionsEuropean stock markets are mostly in the red this morning, as defence company stocks fall.Shares in German automotive and arms manufacturer Rheinmetall are down 3.3%, UK weapons maker BAE System has dropped by 1.27%, and Italian defence firm Leonardo has lost 2.2%.Mainland European equity markets are heading lower in a day that will be dominated by monetary policy out of the Americas.Notably, the defence sector has particularly suffered this morning, with the likes of BAE Systems, Rheinmetall, and Thales lose traction as the end of the Russia-Ukraine war comes into sight. Unfortunately for Europe, the peace agreement appears to be a deal Trump has formed with Russia behind the back of European leaders whom the President has labelled weak". Continue reading...

Chancellor tells MPs she was frustrated by leaks that were clearly not authorised'

Data from World Inequality Report also showed top 10% of income-earners earn more than the other 90%

UK gilt yields may have dropped a bit relative to other major countries, but it's not at all clear that the fall with continue

Thinktank says Rachel Reeves's budget had started to assure bond markets about fiscal approach

In a boost for Rachel Reeves, deputy governor says analysis shows chancellor's policies will lower annual rate next yearThe Bank of England expects Rachel Reeves's budget will reduce the UK's headline inflation rate by as much as half a percentage point next year.In a boost for the chancellor after last month's high-stakes tax and spending statement, Clare Lombardelli, a deputy governor at the central bank, said its early analysis showed the policies would lower the annual inflation rate by 0.4 to 0.5 percentage points for a year from mid-2026. Continue reading...

Rolling coverage of the latest economic and financial news, as Bank of England policymakers testify to MPs on the Treasury committeeTeresa Ribera, the EC's executive vice-president for Clean, Just and Competitive Transition, has explained why the Commission is probing Google over its artificial intelligence activities:AI is bringing remarkable innovation and many benefits for people and businesses across Europe, but this progress cannot come at the expense of the principles at the heart of our societies,"This is why we are investigating whether Google may have imposed unfair terms and conditions on publishers and content creators, while placing rival AI models developers at a disadvantage, in breach of EU competition rules." Continue reading...

Age of diagnosis' of low-level mental health issues' such as ADHD making system too costly, Conservative leader says

Booming Chinese exports have driven trade surplus past $1tn but also reveal the extent of country's reliance on foreign marketsA boom in exports that has pushed China's trade surplus past $1tn for the first time reveals the extent to which its economy is still overwhelmingly reliant on foreign markets - and the difficulty figures like Donald Trump will have in trying to rebalance global trade.Data released on Monday shows that in the first 11 months of this year, China's trade surplus in goods was $1.076tn. The record trade surplus comes even as exports to the US have plummeted, a reflection of the bruising US-China trade war that, despite a recent cooling, has dampened the flow of goods between the world's two largest economies. Continue reading...

Bank reports 1.1% drop in card spending despite Black Friday boost for retailersUK households cut back on spending at the fastest pace in almost five years last month as consumers put Christmas shopping on hold, according to a leading survey.Adding to concerns that uncertainty surrounding the budget has helped dampen consumer confidence, Barclays said card spending fell 1.1% year on year in November - the largest fall since February 2021. Continue reading...

Paramount says its hostile offer provides superior value, and a more certain and quicker path to completion to WBD shareholders"

Bank under budget pressures as it responds to former Fed chair's report into failure to forecast surging inflation

Markets expect final rate cut amid pressure from Trump as Jay Powell urges central bank to proceed with cautionA divided Federal Reserve meets this week to decide whether to cut interest rates, the US central bank's last meeting before the end of a tumultuous year.The US central bank faces a number of unique challenges as it weighs its latest interest-rate decision. Continue reading...

My husband, Bill Kingdom, who has died aged 69, was a global leader in water supply and sanitation. He worked for 20 years with the World Bank, based in Washington DC from 1999 to 2019, where he led urban and rural water supply and sanitation projects. He developed innovative financial and governance frameworks in south and east Asia, southern Africa, and the Middle East. His work provided access to clean and affordable water for some of the poorest people in the world.Bill's early career was with Mott MacDonald, the engineering consultants based in Cambridge, from 1978 to 1986. During that time he worked for several years on water projects in Indonesia, where he developed a love for the country and enduring friendships. He became fluent in the local language and enjoyed visiting bric-a-brac markets. Later, based in Oman, Bill was instrumental in bringing drinking water to Muscat. Continue reading...

Mark Carney is considering lifting a tanker ban that has protected coastal communities for 53 yearsThe distress call went out to the Canadian coast guard station after midnight on an October night. The Nathan E Stewart, an American-flagged tugboat, sailing through the light winds and rain of the central British Columbia coast, had grounded on a reef.The captain tried to reverse, moving the rudder from hard over port to hard over starboard. The boat pivoted but did not move, and the tug repeatedly struck the sea bed. Continue reading...

High street banks dodged a windfall tax - now they should invest in growth of local lendersNikhil Rathi, chief executive of the Financial Conduct Authority, made a pilgrimage on Friday from its glass and steel HQ in east London to the Pioneers Museum in Rochdale - the spiritual home of the co-operative movement.His unlikely day trip aimed to highlight the City watchdog's role in opening the way to a doubling of the size of the mutuals sector - a Labour manifesto pledge. Continue reading...

In today's newsletter: Critics say the OBR's growing influence has outpaced its accountability, raising questions about whether it serves the public, the Treasury, or the marketsGood morning. The Office for Budget Responsibility (OBR) was designed to be an institution that crunches numbers quietly in the background. Instead, over the past week, it has found itself dragged kicking and screaming into the political spotlight.On the day attention should have been fixed on Rachel Reeves's economic plans, many instead watched the fallout from the OBR's accidental early publication of her budget. After the leak there followed days of anger and disbelief, which culminated in the resignation of the OBR's chair, Richard Hughes.UK news | Vladimir Putin is morally responsible" for Dawn Sturgess's novichok death, an inquiry has found. Sturgess died after spraying herself with a nerve agent smuggled into the UK by Russian agents.UK politics | A group of Holocaust survivors have demanded Nigel Farage tell the truth and apologise for the antisemitic comments that fellow pupils of Dulwich College allege he made toward Jewish pupils, as the Reform leader turned on broadcasters for questioning him about the growing scandal.Eurovision | Ireland, Spain, Slovenia and the Netherlands will boycott next year's Eurovision after Israel was given the all-clear to compete in the 2026 song contest despite calls by several participating broadcasters for its exclusion over the war in Gaza.UK politics | Lord Evans of Watford, suspended by the House of Lords for breaking lobbying rules after a Guardian investigation, is now facing claims that he received at least $1m (760,000) in an allegedly corrupt deal.US news | The New York Times is suing the US defense department and the defense secretary, Pete Hegseth. The lawsuit argues restrictions imposed by the Trump administration violate free speech protections. Continue reading...

Commission unveils 3bn strategy to de-risk and diversify supply chains for critical rare earth metals and elements

Private employment decreased by 32,000 jobs last month after an upwardly revised 47,000 increase in OctoberUS private payrolls unexpectedly declined in November, the ADP employment report showed on Wednesday.Private employment decreased by 32,000 jobs last month after an upwardly revised 47,000 increase in October. Economists polled by Reuters had forecast private employment rising by 10,000 jobs after a previously reported 42,000 rebound in October. Continue reading...

A viral essay has caused outrage in the US with its argument that the poverty line for a family of four is now $136,500. But is this so wrong?Have you heard that a family of four in the US is now considered poor if their household income is under $136,500 (103,300) a year? Don't @ me about the maths - I'm just the messenger. The person behind this calculation is Michael Green, who is chief strategist and portfolio manager for Simplify Asset Management. I think this means that he makes large sums of money by fiddling with even larger sums of money. When not doing that, Green writes a newsletter and recently published a viral piece on Substack arguing that the poverty line, calculated as $31,200 by the Department of Health and Human Services, is a broken benchmark". These days a family with a low six-figure income is officially the new poor", he reasoned.Green's essay has sparked numerous rebuttals, with people arguing that he had turned the poverty measure into a middle-class measure. It's completely disconnected from reality," the economist Kevin Corinth said, for example, noting that the $136,500 figure was higher than the US median household income of $83,730. It's laughable to put a poverty line far above the median income in the United States." Continue reading...

Economic obsession | Two-child benefit divide | Paddington stare | No Place | Word of the yearYour editorial (The Guardian view on OBR v the Treasury: ministers have embraced the theatre of errors, 1 December) correctly flags the huge uncertainty in trying to come up with a five-year forecast of the difference between taxes and spending. Although markets like big fiscal headroom numbers, they seem to ignore the wise words of Bertrand Russell, who defined mathematics as the subject in which we never know what we are talking about, nor whether what we are saying is true". This also applies to the concept of the medium-term fiscal headroom that economists and politicians alike are obsessed with.

With the row deepening over budget leaks, who is most likely to replace Richard Hughes in the increasingly thankless role of chair?Had Richard Hughes not resigned as boss of the Office for Budget Responsibility (OBR) on Monday amid the indignation over the accidental publication of Rachel Reeves's budget, the Treasury might now be under pressure over the tsunami of leaks that preceded it.The OBR's David Miles told MPs on Tuesday the leaks had been so widespread and misleading that the watchdog feared its reputation was at stake. Continue reading...

BoE governor Andrew Bailey says it's important to remember why Office for Budget Responsibility was created, amid row over budget leaksThe Bank of England is planning to ease capital rules for high street banks for the first time in a decade, marking the latest attempt to loosen regulations designed to protect the UK economy in the wake of the 2008 financial crisis.The central bank has proposed lowering capital requirements related to risk weighted assets, by one percentage point to about 13%, reducing the amount lenders must hold in reserve. The move is designed to make it easier to lend to households and businesses.The results of the 2025 Bank Capital Stress Test demonstrate that the UK banking system is able to continue to support the economy even if economic and financial conditions turn out to be materially worse than expected. This underscores the role of financial stability as a pre-condition for sustainable growth.UK-focused banks - Lloyds Banking Group, Nationwide Building Society, NatWest Group and Santander UK Group Holdings plc were most affected by the UK macroeconomic stress, driven by higher interest rates, inflation, unemployment and house price falls.Internationally-diversified banks - Barclays plc, HSBC Holdings plc and Standard Chartered plc faced additional pressures from global downturns and traded risk shocks in markets such as Hong Kong, China, the US and Europe. Continue reading...

Official tells MPs there was lots of information appearing in the press that wasn't particularly helpful'The Office for Budget Responsibility complained to senior Treasury officials in the run-up to the budget about a flurry of leaks that it said spread misconceptions" about its forecasts, it has emerged.Prof David Miles of the OBR's budget responsibility committee told MPs on the Treasury select committee on Tuesday that the watchdog had raised the issue of leaks with the department before the chancellor's statement last week. Continue reading...

Prices are rising on everything from energy to food - but there are ways to cushion the impactInflation measures how much prices rise over time. It is measured officially by the Office for National Statistics (ONS). Continue reading...

UK economy will grow faster than France, Germany and Italy but slower than US next year, report predicts

Labour backbenchers have been cheering it as a win for the most vulnerable in society. In fact it was aimed at the bond marketsThe charge is a grave one: that Rachel Reeves has just lied to Britons, spooking them into paying billions in extra taxes that she can splash out on higher benefits. However hyperbolic, this isn't the usual Westminster sparring; this time, someone might get hurt. A week ago, critics of Reeves and Keir Starmer were, rightly, calling their budget chaotic". Today, it's denounced as lies, and Kemi Badenoch is demanding the chancellor quit.

Richard Hughes takes full responsibility' for watchdog error as Starmer attempts to secure chancellor's positionThe chair of the Office for Budget Responsibility has resigned after a damning internal inquiry into the leak that threw Rachel Reeves's budget into chaos described it as the worst failure" in the institution's history.The departure of Richard Hughes, who said he took full responsibility" for the watchdog's failure to handle sensitive information, dragged the rolling recriminations over the budget into a fifth day. Continue reading...

The government is trapped between Labour's instincts and bond traders' demands. Sensible fixes exist, but require imagination ministers have yet shownThe confected frenzy splashed across the morning front pages from the Telegraph to the Mail is remarkable mostly for its absurdity. An outrage machine has decided that a forecast of a few billion pounds in a model that makes projections about trillions of pounds of taxes and spending is the lie of the century. We can't predict the weather next year, but apparently the public finances in 2029 can be judged with pinpoint accuracy. That's why the headlines about holes" and sleaze probes" are a joke. It is theatre, but it is bad theatre.The Office for Budget Responsibility (OBR) possesses no great moral or predictive authority. Yet many of its accusers and defenders treat it as an allseeing oracle. In fact, the OBR, to its credit, admits that its medium-term projections are frequently wrong. It often wrongly estimates inflation and productivity, and has had its assumptions upended by unforeseen events. The OBR's 2019 five-year forecast undershot actual GDP growth by 200bn. Given this degree of error, treating a projected current budget balance of 20bn in 2029-30 as a hard fact is deeply unserious.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Treasury's independent economic forecaster says outlook for economy rosier than chancellor led everyone to believe

Richard Hughes says he is stepping down in order to restore confidence in organisationQ: Yesterday you said Rachel Reeves was lying. Today you are saying she gave out false information. Are you still accusing her of being a liar?Badenoch replies: Yes." Continue reading...

Keir Starmer has been pushed to defend his chancellor after she was accused of lying in the run-up to the autumn budget. Rachel Reeves is alleged to have misled the public by citing bleak economic forecasts from the Office for Budget Responsibility to justify tax rises, even though the figures were more positive than she suggested. Lucy Hough is joined by the head of national news, Archie Bland Continue reading...

Pippa and Kiran discuss the prime minister's speech on Monday and ask whether it will take attention away from allegations that the chancellor misled the public with her budget statements. Plus: chaos at Your Party's first conference Continue reading...

Rolling coverage of the latest economic and financial newsManufacturing activity across the eurozone has slipped back into contraction territory last month, as demand weakened and firms cut staff.The HCOB Eurozone Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 49.6 in November from 50.0 in October. That's a five-month low, and shows a small contraction. Continue reading...

Investigation finds organisation's leadership over many years was to blame for error, and similar breach happened earlier this year

Data comes as KPMG highlights soft consumer spending as one factor likely to hold back growth in 2026Shoppers held back from visiting high streets over Black Friday, data shows, amid fears weak consumer spending will put the brakes on economic growth in 2026.Visitors to all UK shopping destinations were down 2% on Friday and 7.2% compared with the equivalent days last year, according to the monitoring company MRI Software, with locations near central London offices among the few to experience a lift in visits. Continue reading...

Rising economic division is destabilising nations and eroding accountability. Joseph Stiglitz's G20 blueprint offers a way toward global economic renewalWhen Swiss tycoons handed Donald Trump a gold bar and a Rolex watch - gifts that were followed by a cut in US tariffs - it was no diplomatic nicety. It was a reminder of how concentrated wealth seems to buy access and bend policy. It may, alarmingly, become the norm if the global inequality emergency" continues. That's the message of the most recent work by the Nobel laureate Joseph Stiglitz. The economist sees the yawning gap between rich and poor as a human-made crisis which is destroying politics, society and the planet. He's not wrong.The problem is no longer confined to a few fragile states. It is a global harm, with 90% of the world's population living under the World Bank's definition of high income inequality". The US sits just below that threshold and is the most unequal country in the G7, followed by the UK. Prof Stiglitz's insight is that the current system's defenders can no longer explain its mounting anomalies. Hence he wants a new framework to replace it. His blueprint for change is contained within the G20's first-ever inequality report, endorsed by key European, African and middle-income nations.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

An honest debate is needed on this polarising topic as sectors such as social care struggle with recruitmentKeir Starmer's response to the 69% fall in net migration revealed in official figures last week was to remark: That's a step in the right direction."Describing a reduction of more than two-thirds of any indicator in a single year as a step" would be a creative use of statistics, putting it kindly. Continue reading...

The high-value council tax surcharge may only raise 400m but it's the best opportunity for a bigger, fairer tax on wealthRachel Reeves won little credit last week for lifting the lid on one of the most heated tax debates of the past three decades.Who in their right mind would consider engaging in the fight that would inevitably lead to some of the richest people in the land calling for your head? Continue reading...

Clarification creates prospect of two-tier system for retirees solely on new state pension and those on private schemesPeople who rely only on their state pension for their income will not have to pay tax on it, the chancellor, Rachel Reeves, has said, creating the prospect of a two-tier system for those in retirement.The new state pension is poised to rise to 241.30 a week next April, putting the annual income for someone receiving the standard payment at 12,547 - just below the personal tax allowance of 12,570 a year. Continue reading...

JP Morgan and Goldman Sachs to expand UK presence after sector was spared from higher taxes in budgetOver canapes of beef and stilton pie, bone marrow gravy and mushy peas, the financiers at JP Morgan's New York headquarters held their champagne flutes aloft for a toast: His majesty the king."Just days before Rachel Reeves's budget - amid the chancellor's efforts to soothe business fears and bond market jitters - Jamie Dimon, the Wall Street banking company's boss, was hosting a birthday celebration for King Charles at its new $3bn (2.3bn) Manhattan headquarters. Continue reading...

Let's set the record straight on the cause of our economic woes and inability to control immigration, writes Robert Gildea. Plus a letter from Rachel FoggittBetter late than never, Jonathan Freedland (Rachel Reeves is studiously ignoring the cause of Britain's woes: the Brexit-shaped hole in the roof, 21 November). Brexit was supposed to take back control" and sort out the immigration crisis. In both respects, it failed. Polish plumbers have been replaced by Afghans in asylum hotels, and the UK has forfeited the mechanism to return them to the EU. Meanwhile, with trade, investment and labour choked off, the economy grinds along at the bottom.The Labour government is petrified of reopening the debate for fear of losing votes to Reform UK, but responsibility for Brexit failures needs to be laid squarely at Nigel Farage's door. Through its 2024 pact on migration and asylum, the EU has a robust, collective way of dealing with migration; on our own, we are as likely to stop the boats as Canute was to turn back the waves. A recent poll showed that 57% of voters would return to the EU. Continue reading...

Downing Street brushes off claims that the chancellor misled voters about the state of the public finances ahead of the budgetThe Office for Budget Responsibility has said that Rachel Reeves, the chancellor, was not at risk of breaking her fiscal rules because of its productivity forecast downgrade.In a highly unusual move, Richard Hughes, chair of the OBR, has sent a letter to the Commons Treasury committee, giving details of the five assessments it sent to the Treasury ahead of the budget estimating whether or not the fiscal rules would be met.Before any policy measures, Rachel Reeves was forecast to be running a small current budget surplus in her key year of 2029-30 and therefore meeting her fiscal rules. No fiscal repair job needed. Even after accounting for the U-turns on winter fuel payments and disability benefits since the spring, she was running only a very small deficit. Continue reading...

Official forecaster's chair says chancellor knew about revised predictions well before her budget change of heart

In addition to rising prices and tariffs, readers cite growing unemployment as a reason not to exchange gifts this yearAmericans are feeling rattled about the state of the economy. Donald Trump has batted away question after question from reporters on concerns over higher prices, just a year after he won an election promising to bring down costs.While the White House has tried to reduce concern, floating tariff-funded $2,000 stimulus checks and removing import levies on certain agricultural imports, many consumers remain anxious. Continue reading...

Reuters news agency says it obtained document after visiting URL it predicted file would be uploaded to

Labour MPs welcome scrapping of two-child benefit cap but worry about hefty future tax increases on constituentsRachel Reeves has been warned that her plans for tax rises and spending restraint in the run-up to the next general election resemble a work of fiscal fiction", as MPs expressed concern about the impact of her budget on their constituents.A day after the chancellor's statement, the Institute for Fiscal Studies (IFS) said Reeves had chosen a high-risk strategy by backloading the squeeze to just before voters go to the polls in 2029. Continue reading...

Businesses grumble about lack of ambition and urgency as Rachel Reeves continues to shy away from meaningful tax reformWhere was the applause for the budget from the business world? Well, there was the banking sector, but it was reportedly under strong encouragement from the Treasury to engage in a round of corporate cheerleading after being spared higher levies. Nor should one get carried away by JP Morgan's coordinated announcement of a new 3bn office in Canary Wharf. Yes, the commitment shows some level of long-term confidence in the UK, but large international banks do not make property decisions on the basis of what they heard one afternoon.In the non-banking business world, the broad day-after reaction to the budget can be summarised as a resigned shrug coupled with amazement that the chancellor, Rachel Reeves, offered so few pro-growth measures even as the Office for Budget Responsibility set out two depressing forecasts. First, that the average growth rate for the economy from 2026 to 2029 will be only 1.5%, rather than the 1.8% expected in March. Second, real-terms annual growth in disposable incomes will be tiny. Continue reading...

PM says: We kept to our manifesto in terms of what we've promised. But I accept the challenge that we've asked everybody to contribute'

Cap on inheritance tax paid by their offshore trusts will only help those worth more than 83m, say expertsA tax break for rich former non-doms that slashes their potential inheritance tax bills was included in the small print of the budget.The benefit relates to how much tax this group faces having to pay on their global wealth held in trust. Continue reading...