Fragile recovery, low growth, global debt, AI, the climate ... The organisations founded in 1944 have lots to talk about this weekThere is likely to be a sense of relief when the International Monetary Fund and the World Bank hold their half-yearly meetings in Washington this week. Not because the world is crisis-free - it clearly isn't - but because since they met six months ago no fresh crisis has emerged.The past half-decade has been as tough as any period in the history of the two organisations. First there was the pandemic, then the surge in inflation as lockdown restrictions were lifted. The cost of living problems were amplified by the war in Ukraine. Then, last October, two days before the start of the IMF/World Bank meetings in Marrakech - and just as things appeared to be calming down - Hamas launched its attack on Israel. Continue reading...
by Miles Brignall, Rupert Jones and Laura Whately on (#6M21F)
The government might be celebrating falling inflation, but higher prices for goods and services are here to stayTwo years ago, a two-litre bottle of supermarket olive oil cost about 7. Step into your local branch today and that same bottle will set you back more than 16. Grab a packet of pasta, or some broccoli, and you will pay 95% and 50% more, respectively, than in 2022. If your car insurance renewal is due, that will be an extra 35%-50%.The Russian invasion of Ukraine almost 26 months ago set off a chain reaction that caused energy and food bills to jump, and ultimately sent inflation in the UK spiralling, reaching a peak of 11.1% in October 2022, the highest rate in 41 years. Continue reading...
European Central Bank says rate cuts would be appropriate if inflation keeps falling, as BoE policymaker Megan Greene argues UK rate cuts are a way offThere's takeover drama in the self-storage world this morning, as another UK company falls to a foreign buyer.Europe's Shurgard has agreed a deal to buy London-listed Lok'nStore, in a deal worth 378m. Continue reading...
Thanks to near-monopolies in many industries, corporations are seeing record profits as consumers struggle with high pricesWe learned this week that the Consumer Price Index climbed 3.5% in March from a year earlier, up from 3.2% in February, and faster than most economists anticipated.This poses a conundrum for central bankers who have made it clear they want to see further evidence that inflation is cooling before they cut interest rates.Robert Reich, a former US secretary of labor, is a professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His newest book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com Continue reading...
Additional measures from 30 April for imported animal and plant products could hike costs by 10% in first year, says Allianz TradeNew post-Brexit UK border controls coming into force later this month will cost British businesses 2bn and fuel higher inflation, according to a report warning that UK-EU trade will be damaged as a result.With less than a month before the introduction of new checks on animal and plant products from 30 April, the insurer Allianz Trade said the controls agreed under Boris Johnson's Brexit deal could add 10% to import costs over the first year. Continue reading...
Call for caution amid fears government intervention could lead to costly mistakes and prompt subsidy battleAggressive use of industrial policy by the world's most powerful economies risks becoming an expensive mistake that could trigger a tit-for-tat subsidy war, the International Monetary Fund has said.In a warning shot to governments around the world, the IMF said attempts to increase innovation only worked under certain limited conditions and were not a magic cure" for slow growth. Continue reading...
The consumer-price index, driven by fuel and housing costs, rose 0.4% from February, higher than the 0.3% expectedGlobal financial markets have scaled back expectations for an imminent cut in interest rates on both sides of the Atlantic after figures showed US inflation rose by more than expected in March.Figures from the US Department of Labor show a jump in fuel and housing rental costs drove up the consumer price index (CPI) to 3.5% in March compared with a year earlier, higher than expected by Wall Street economists. Continue reading...
Simon Stiell calls for reform at development banks to enable governments to provide more climate finance to developing worldThe World Bank must take a quantum leap" to provide new finance to tackle the climate crisis or face climate-driven economic catastrophe" that would bring all the world's economies to a halt, the UN climate chief has said.Simon Stiell warned that there were just two years left to draw up an international plan for the climate that would cut greenhouse gas emissions in line with the goal of limiting temperature rises to 1.5C above preindustrial levels. Continue reading...
Small business owner Scott Richardson chose Trump to shake things up but a strong economy means he's sticking with BidenFor the past 35 years, Scott Richardson and his wife, Theresa, have run a small, cheerful restaurant and catering business outside Philadelphia. Occasionally Yours has long been a community meeting spot in the town of Swarthmore. More recently, it has taken on another, unexpected, role - on the stage of national politics.Richardson is an independent-minded small business owner in a key swing state - exactly the kind of person US presidential candidates are desperate to woo. In 2016, when Pennsylvania went Republican for the first time since 1988, he voted for Donald Trump. Then, in 2020, dismayed by Trump's Covid response, he switched to Joe Biden, in no uncertain terms. Richardson's vote tracked how the state went in both elections. Continue reading...
by Kalyeena Makortoff Banking correspondent on (#6KXVB)
In annual letter to investors, Jamie Dimon warns wars in Ukraine and Middle East could become far worse'The boss of the US bank JP Morgan has warned that the world could be facing the most dangerous moment since the second world war, putting lives and economic growth at risk.In his annual letter to investors, Jamie Dimon said the world had been generally on a path to becoming stronger and safer" in recent years but had suffered a major reversal in February 2022 when Russia invaded Ukraine. Continue reading...
Ras el-Hekma is part of a $60bn package to help the economy withstand the impact of conflict in Gaza, but critics fear the money will entrench a corrupt, oppressive regimeIt is one of the few undeveloped spots remaining on the Mediterranean coast. There are white sand beaches, a few olive groves and an ageing 1940s holiday home built by the deposed King Farouk. So far, there is nothing to suggest that, within 30 years, the tranquil Egyptian peninsula of Ras el-Hekma will host a major new city.On 23 February, the Abu Dhabi sovereign wealth fund ADQ announced plans to develop Ras el-Hekma as part of a deal worth $35bn (28bn) in investment and debt relief. According to the Egyptian government, the 170 sq km city will include a marina, an airport and capacity for 8 million tourists a year. It is the largest foreign direct investment deal in Egyptian history by some margin, with ADQ paying the government the equivalent of 7% of the UAE's total GDP upfront, a year before it plans to break ground. Continue reading...
by Richard Partington Economics correspondent on (#6KX4C)
In London, rates for Battersea power station's 8m flats are still set with reference to its low-value past, and their rich owners pay less than householders in HartlepoolBattersea power station offered no prospect of luxury living when Tony Belton became a local councillor in 1971. The coal-fired behemoth was nearing closure after 40 years of belching soot over London, and would spend almost as long in dereliction and blight as a result of false starts at redevelopment.By 1991, most people visiting the area were there for the dogs' home or council rubbish dump. Squatting pigeons were the power station's only residents, and steel bracing protected its 48-metre-high brick walls fromcollapse. Continue reading...
Economic upticks are welcome but they won't help the chancellor's chances of retaining his seatSome chancellors are sacked. Some are forced to resign. Some exchange the green benches of the House of Commons for the red benches of the Lords. But not in living memory has a chancellor lost his seat at a general election.If opinion polls are accurate, Jeremy Hunt will break that tradition, with the Liberal Democrats on course to take his newly created Godalming and Ash seat in Surrey. The last time the Conservatives were on the wrong end of a landslide, Kenneth Clarke, then chancellor, held his Nottinghamshire seat reasonably comfortably. Hunt has a real fight on his hands. Continue reading...
As the organisation's anniversary nears, borders around the world are closing againWhen trade ministers gathered in the Moroccan city of Marrakech 30 years ago this month to sign the agreement creating the World Trade Organization (WTO), the mood was celebratory. The Berlin Wall had come down only recently, communism had collapsed, and there was optimistic talk of how the body would prise open new markets and act as the arbiter when disputes broke out between countries.The atmosphere today is much darker than it was in April 1994. Any enthusiasm for groundbreaking trade liberalisation deals disappeared decades ago and has been replaced by covert - and often overt - protectionism. Continue reading...
Short-termist and kneejerk decisions to balance the books' always end up with the exchequer paying out more for lessAs governments across the world assess their responses to four years of successive economic calamities, it is clear the UK's default reaction - to cut corners and adopt the cheapest route out of a malaise - has many hidden costs.Across the public sector, from warships to NHS computer systems and railways, projects are turned inside out and salami-sliced to a point where few can remember the original concept. Continue reading...
Unemployment rate at 3.8% while job gains well above the 192,000 economists expected for the monthThe US workforce added 303,000 jobs last month, far more than expected and the 39th straight month of job gains in the US. The unemployment rate dipped to 3.8%.Joe Biden hailed the report as a milestone in America's comeback". Continue reading...
Live, rolling coverage of business, economics and financial markets as Fitch downgrades debt of parent of water company, saying default is likelyTim Moore, economics director at S&P Global Market Intelligence, which compiles the PMI survey, said:The recovery in service sector output lost a little bit of momentum during March, and more so than suggested by the flash PMI results, but the overall picture remains reasonably positive.Business activity has now expanded for five consecutive months, supported by sustained improvements in new order intakes. The solid growth rate achieved in March reinforces the view that a rebound in service sector performance is helping the UK economy to pull out of last year's shallow recession. Continue reading...
by Richard Partington Economics correspondent on (#6KTWH)
Study shows delivery apps such as Deliveroo and Just Eat still popular after pandemic boom in ordersDelivery app riders pedalling through cities and tailbacks at drive-throughs were familiar signs of Britain's hunger for takeaway food at the peak of the Covid pandemic. Now a study suggests it became an enduring habit.After a boom in orders on Deliveroo, Just Eat and other platforms by locked-down consumers, research by the Institute for Fiscal Studies (IFS) suggests the popularity of takeaways, meal deliveries and food-on-the-go bought from retailer such as sandwiches and crisps has remained above pre-pandemic levels after the removal of Covid restrictions. Continue reading...
Live, rolling coverage of business, economics and financial markets as UK postal service says it wants to cut 1,000 jobs and cut delivery daysThe question on economists' lips after the surprise easing of eurozone inflation is: will the European Central Bank (ECB) cut interest rates as early as this month?The ECB's rate-setting governing council, led by president Christine Lagarde, meets next week. Economists expect the council to cut rates in June, but surprising data and some doveish comments from some members of the council appear to have put an April cut into play.While at first sight this looks like it opens up a possible rate cut in April, the ECB is unlikely to act this month. More data on wage growth will come in May, and the ECB needs to be certain of its path. In President Lagarde's own words: we will know a little more in April, but we will know a lot more in June".Christine Lagarde's previous indication that the ECB may not commit outright to a path of rate cuts suggests a cautious approach, but the consensus among economists leans towards a potential cut as early as June, pending further data on wage growth trends.The challenge here for the ECB is that reaching the last mile target inflation rate of 2% may prove more arduous than anticipated, with incremental decreases seen as most likely.Will the labour market tighten further now that GDP growth looks to be rebounding? We doubt it and, in fact, suspect the unemployment rate will edge up over the coming months.A still-low unemployment rate doesn't necessarily mean wage growth will remain at today's highs, so it need not worry the ECB nor prevent it from starting its easing cycle. We think wage growth will come down, in line with the fall in inflation in recent months as workers' negotiating power diminishes. A recovery in productivity would support wage growth even as inflation eases. We think productivity growth is now improving, but slowly does it. Continue reading...
Output improves to 20-month high and job losses slow but global problems continue to restrict foreign ordersA jump in domestic orders helped pull UK factories out of almost two years of contraction last month, according to a leading business survey.Output from the manufacturing sector improved to a 20-month high in March, marking the end of a period of shrinking activity that started in July 2022. Continue reading...
Retailers cut the price of Easter treats, clothing and electrical items as consumer spending slowedInflation in shop prices in the UK has eased to the lowest level for more than two years after retailers cut prices on Easter treats, clothing and electrical goods amid a slowdown in spending by consumers in the cost of living crisis.Industry figures show prices rose at an annual rate of 1.3% in March, down from a rate of 2.5% in February - the slowest pace since December 2021, according to the latest monitor from the British Retail Consortium (BRC) trade body and the market research firm NielsenIQ. Continue reading...
Julian Richer, a landlord himself, says markets have created only disaster and the nation must shift from its focus on ownershipBritain is a nation obsessed with home ownership. A fundamental necessity for all turned commodity to speculate on, it is featured on daytime TV as entertainment, the sure-fire profit-spinner open to anyone.The truth, as we all know, is that the prospect of home ownership is drifting increasingly out of reach for millions. Figures released last week show that as few as 7% of local authorities in England and Wales have homes that can be bought for less than five times workers' earnings and are therefore deemed affordable". In 1997 the figure was 88%. Continue reading...
The Conservatives' pernicious reign, defined by a toxic belief in self-organising markets, has brought Britain to its knees. But we now have an opportunity to turn things around - by reimagining the UK as a we' society rather than an I' societyIf there is any consensus in our otherwise fractured, toxic national debate it is that we cannot go on like this. Our economy is in crisis, exemplified by an annual 100bn shortfall in public and private investment, which must be lifted decisively for Britain to break out of today's triple whammy of stagnant growth, productivity and living standards. Society reels from alarming gaps in the provision of crucial public services and the yawning unfairness in the distribution of income, wealth and opportunity. Our democracy and state seem incapable of acknowledging the full extent of these deformities, let alone adequately responding to them. Our international standing has plummeted at a time of geopolitical peril. A transformative response is an imperative. My new book, This Time No Mistakes: How to Remake Britain, tries to address the origins of this interlinked crisis - and offer a feasible way out. Nothing is immutable. We are agents of our own destiny.The heart of the problem is a misconception about how capitalism and society work. Capitalism must be managed and regulated to work for the common good, just as society has to be curated to provide fairness and opportunity for all. Crucially, the vitality of the two are interdependent. Capitalism must be organised so it provides economic ladders that every individual can climb while a social contract must offer a floor below which they cannot fall. Britain's problem is that the Conservative party, in power for all but 13 of the last 45 years, does not accept these truths or interdependencies. Worse, even if it did, neither the dominant culture and practise of our capitalism, nor the structure of our democracy, state and media would have made it easy to fashion the necessary responses. Continue reading...
The shadow chancellor is often criticised for her centrist positions, but Labour's plan for a long-term rescue is a vital difference between the partiesWhen preparing to become Labour's chancellor in 1964, James Callaghan used to go up to Oxford for economics lessons at Nuffield College. The present shadow chancellor, Rachel Reeves, is already steeped in economic knowledge, including that of the UK's economic history, as her recent Mais lecture at Bayes business school made clear.I was amused by some of the pre-lecture media speculation that Reeves might express her admiration for Margaret Thatcher. On the contrary, she let it be known, in an aside not in the printed text, that distaste for Thatcherism was one of her motives for going into politics. Continue reading...
by Presented by Jane Lee and Matilda Boseley; Series on (#6KQXJ)
Guardian Australia's Full Story co-host Jane Lee and reporter Matilda Boseley investigate the mystery of who screwed young people out of affordable housing, education and secure workWith rising house prices, a decade of wage stagnation and ballooning student debt, young people in Australia are living through what author Jill Filipovic describes as a series of broken promises'. In episode 1 of this new series from Guardian Australia, Full Story's co-host Jane Lee and reporter Matilda Boseley sort through these broken promises, investigating why young people are living in a time of such economic strain.In this episode, we hear from a handful of experts featured in Who screwed millennials?, including author Jill Filipovic, youth researcher Intifar Chowdhury, author Malcolm Harris, Guardian Australia editor Lenore Taylor and former Greek finance minister Yanis Varoufakis about how millennials became the first generation to be worse off than their parents Continue reading...
Live, rolling coverage of business, economics and financial markets as minister says water company's leadership has been a disgrace'The UK government has said it is prepared for a range of scenarios" for Thames Water.A government spokesperson said:Like any company needing to secure new investment there are a wide range of options available to water companies, including the injection of new equity from any prospective investors.Ofwat, as the financial regulator of the water sector, continues to engage with Thames Water to improve its financial resilience.I don't want to pollute rivers, and nor does anyone in Thames Water. I would point out that E coli has many different sources. It's not just from sewage; it's also from land run-off, it is from highway run-off; it is from animal faeces. All of those things contribute to the problem.And I am absolutely determined that at Thames, that we will pay our part in cleaning up the problem, and so the Thames is a river that people can use as they would like to every day. Continue reading...
Greater fall per head and latest trade data illustrate longer term decline of economy Blow for Sunak as revised figures confirm UK went into recession last year
Although there are significant financial and emotional benefits to returning to the nest, it should be a choiceThe 2021 census already confirmed it: more adult children than ever are still living with their parents. But the Financial Times has recently revealed just how drastically the scales have tipped: about 40% of 18- to 34-year-olds now live with their parents, making it the most common domestic arrangement for this age group. Previously, it was living as a couple with children.It's not just an epidemic of Young, Dumb and Living Off Mum - I've moved back home twice since graduating in 2018, and I know plenty of young well-to-do professionals who have felt obliged to do the same, or not moved out at all. There are also plenty of people who are unable to live in their family home due to distance and perhaps wish they could. Continue reading...
The Israeli-American's book, Thinking, Fast and Slow, was a worldwide bestseller with revolutionary ideas about human error and biasDaniel Kahneman, a psychologist who pioneered theories in behavioural economics that heavily influenced the discipline, and won him a Nobel prize, has died at age 90.Kahneman, who wrote bestselling book Thinking, Fast and Slow, argued against the notion that people's behaviour is rooted in a rational decision-making process - rather that it is often based on instinct. Continue reading...
Prime minister has ruled out May election but households face high prices for sometime to comeThere had been feverish speculation it would be this week. The drive to Buckingham Palace, police outriders and news helicopters in tow. The lectern on Downing Street. The prime minister announcing a general election.Tuesday is the final day Rishi Sunak could dissolve parliament if he were to send voters to the polls on 2 May, one of the key dates in the 2024 election-watchers' diaries, when local elections are also taking place. However, after the prime minister ruled out the possibility earlier this month, the waiting game continues. Continue reading...
Despite being called continuity Hunt, the shadow chancellor has set out a proposal for meaningful changeChancellor Jeremy Hunt likes to tell business leaders not to worry about political instability and more policy upset. He claims to be carefully building policy that will survive - win or lose the next election. If the shadow chancellor, Rachel Reeves, succeeds him, accepting nearly all his proposals, be reassured, he says, there will be continuity rather than change. In the run-up to her important Mais lecture last week, the pre-briefings seemed to warrant his judgment.She would reaffirm her iron attachment to fiscal rules and budgetary discipline, we were told. After all, she had beaten a wholesale retreat from Labour's cornerstone 28bn green spending commitment. In successive fiscal events", she has accepted all the proposed tax cuts, not even reinstating the cap on bank bonuses. There was chatter describing her as continuity Hunt". Even Margaret Thatcher, we read, would be invoked as a change agent she admired. Unite sharpened its claws, writing off the lecture even as Reeves spoke as for the birds". Only a sustained rise in public investment in infrastructure", declared general secretary Sharon Graham, can turn the tide on decline". Two days later, columnist Owen Jones resigned from the Labour party, citing the refusal to challenge catastrophic Tory policies in a race to the bottom". Continue reading...
The 25-year-old pay floor is justly celebrated but doesn't tackle issues that mean exploitation and misery for manyNext month will mark 25 years since the national minimum wage was first paid in Britain: a quarter of a century during which what was once seen as a radical leftwing policy has won broad cross-party support.Over the past 14 years, the Conservatives have appropriated and expanded the policy, despite adopting a laissez-faire approach to other aspects of labour market regulation. Continue reading...
Economics | The Guardian