Businesses should avoid panic amid fears US will attempt to repatriate jobs and taxes, says Danny McCoy

Comments by Christine Lagarde seen as veiled warning to Donald Trump, who demanded Federal Reserve lower interest rates immediately'Political interference in central bank policymaking could harm plans to bring down inflation, the head of the European Central Bank (ECB) has said.In a veiled warning to Donald Trump, after the US president last week demanded the Federal Reserve immediately" lower interest rates, the ECB president, Christine Lagarde, said meddling by politicians could lead to greater economic volatility and sharply rising prices. Continue reading...

Pippa Crerar and Kiran Stacey talk through what Keir Starmer's first phone call with Donald Trump since the inauguration means for the special relationship'. Also, as the chancellor, Rachel Reeves, prepares for a big speech on growth, does she have any new plans to boost the economy? And will they work?Click here to buy tickets to Pippa Crerar's Guardian Live event with the health secretary, Wes Streeting Continue reading...

While Rachel Reeves may be facing financial headaches, the turmoil is bringing serious good news for saversThe economic headwinds that have been buffeting the chancellor, Rachel Reeves, might be a headache for her, but they have brought positive news for some of those looking for a better deal on their savings.We have heard a lot recently about turmoil in the bond markets and higher UK government borrowing costs - but they are also pushing up the interest you can earn on some fixed-rate savings accounts. Continue reading...

CBI says businesses plan to cut jobs and raise prices while debt charity says millions are facing worries'The government is under growing pressure to get momentum back into the economy amid warnings that businesses plan to cut jobs and raise prices, while millions of families believe their finances will worsen this year.Before a major speech this week by the chancellor, Rachel Reeves, designed to restate Labour's commitment to improving the economy, the CBI said private sector firms were urgently assessing their budgets to offset measures announced in last October's budget. Continue reading...

Across the world, exporters to the US are preparing for an era of disruption if tariffs are imposedDonald Trump, a self-declared big believer" in tariffs on foreign goods, has promised to use them to boost the US economy, revitalize America's industrial heartlands, and reward the tens of millions of voters who sent him back to the White House.Come make your product in America," the president told top executives gathered at the World Economic Forum in Davos this week, promising low taxes to those who take him up on the invitation. But if you don't make your product in America - which is your prerogative - then, very simply, you will have to pay a tariff." Continue reading...

Engaging with councils, universities and developers will be key to bringing the economy back to lifeIt has been a tough beginning to the year for Rachel Reeves. The chancellor has found herself in the spotlight as debt interest costs spiralled, while consumer and business confidence fell. Manufacturers, hampered by high energy costs and the consequences of Brexit, are struggling, while Donald Trump's threats against those who dare to trade with the US are unsettling.It's not a completely new situation. Since the budget, Reeves has been criticised for the mix of tax rises and higher borrowing needed for what is only a modest rise in government spending over the next couple of years. Businesses are angry that much of the tax burden has fallen on them. Consumers, uncertain about the nation's prospects, hunker down. If they spend big, it's on a foreign holiday to escape the gloomy atmosphere at home. Continue reading...

The EU is facing a torrid year ahead from enemies both within and without. But it is still far from a lost causeEurope is in trouble. Multiple, long-simmering external and internal challenges are coming to the boil. Taken together, they comprise the modern EU's biggest existential test since its creation in the early 1990s. But strong, united leadership is lacking. Questioning Europe's will to survive, Poland's prime minister, Donald Tusk, warned last week of a spiritual crisis", of a palpable mood of uncertainty, of loss."The EU's borders, democracies, laws and liberties are threatened by an aggressive Russian nihilism. Relations with the US, transatlantic blood brother and key Nato partner, are coming under unprecedented strain. China, an expansionist, authoritarian superpower, circles like a predatory foe. The economies of leading countries, notably Germany, are contracting or stagnating. Continue reading...

Achim Steiner calls for ministers to discuss reversals to overseas aid squeeze imposed by Rishi SunakThe UN's development chief has urged UK ministers to have a public debate about reversing the brutal" cuts to the country's aid budget made by the Conservative government.Achim Steiner, the administrator of the UN Development Programme, told the Guardian he found it a little bit sobering" that Labour had not yet promised to undo the squeeze imposed by Rishi Sunak. While chancellor, Sunak suspended the UK's commitment to spend 0.7% of national income on overseas aid during the pandemic in 2021, citing budget pressures, switching instead to 0.5%. Continue reading...

Survey signals private sector firms charging higher prices and cutting jobs at fastest rate since 2009 bar pandemic

Gary Stevenson grew up poor, got rich in the City - then found himself wrestling with depression. Now he says he's the only person on the left who really understands the British economy - and the people who wield the powerI've interviewed Gary Stevenson three times. First in 2020 about global finance being screwed with a capital S"; again in 2022 about the cost of living crisis; and then last year when he published The Trading Game, his compelling memoir about life as a trader at Citibank. Now I'm meeting him for the first time in the flesh, ahead of the book's appearance in paperback, and we're talking about yet another crisis.Have you seen the news?" is the first thing he asks, presenting it like a challenge even before he says hello". I rack my brain distressingly slowly, like a librarian using a card index for the very first time, thinking: which bit of the news? LA is on fire; Gaza is on fire; Ukraine is on fire; a bunch of Teslas are on fire. Seriously, we've all seen a lot of news. Continue reading...

Chancellor says scheme aims to bridge gap between Whitehall and local leaders to avoid previous top-down approachRachel Reeves will instruct bosses of the national wealth fund (NWF) and the new Office for Investment to work with regional mayors for the first time, as part of a package of initiatives to boost growth.After a meeting of combined authority mayors and civil servants in Rotherham on Thursday, the chancellor said a deeper relationship between Whitehall and regional leaders would enhance her push to enhance growth nationally. Continue reading...

Pro-growth charm offensive aimed at getting Labour back on the front foot has drawn concerns and questions

President also threatens tariffs on imports to US and repeats call for Nato countries to increase defence spending to 5%

New US president shakes up World Economic Forum with call for lower oil price, interest rate cut, increase in Nato spending, and criticised EuropeJavier Milei then takes a swing at feminism, telling delegates at Davos that it's wrong to make femicide a seperate crime with tougher sentences than for murdering a man.You are legally making a woman's life worth more than a man, he argues. Continue reading...

Trade chief has said membership of Pan-Euro-Mediterranean convention could be part of reset' discussions

Maro efovi says the ball is in the UK's court' as British ministers reportedly consult businesses

From Trump's Project 2025 to a huge aid cut by the Dutch, donors are turning their backs on the developing worldForeign aid spending reached a record high of $223bn (180bn) in 2023, new figures released this week from the Organisation for Economic Co-operation and Development (OECD) confirmed.Yet, in 2024, eight wealthy countries announced $17.2bn in cuts to official development assistance (ODA), and three others hinted at reductions, all to take effect over the next five years. Continue reading...

Rolling coverage of the second day of the World Economic Forum in DavosRachel Reeves has also revealed ministers want to increase higher skilled migration by creating with more visas for people working in AI and life sciences:She told attendees at Davos that the government will publish an immigration white paper later this year.He recognised that this government has got a different strategic approach when it comes to regulation, and he recognised it was time for him to move on and make way for somebody who does share the mission and the strategic direction that this government are taking." Continue reading...

Chancellor tells World Economic Forum in Davos she absolutely' supports wealth creation

S&P 500 and Nasdaq Composite largely unmoved as it opened for trading for first time after inaugurationFinancial markets largely shrugged after Donald Trump outlined plans to impose punitive tariffs on Mexico and Canada as soon as next month while signing scores of executive orders on his first day in office.The US president told reporters in the White House Oval Office he was thinking about introducing 25% US tariffs on imports from Mexico and Canada as soon as 1 February. Continue reading...

US president is expected to slash financial controls and prompt wave of dealmakingWall Street bankers say they are at the beginning of go mode" as they expect Donald Trump's return to the White House to lead to a boom in the industry.Trump's second term is expected to result in a bonfire of regulations, including across financial services, with the president having promised during his election campaign to slash 10 existing regulations for every new one created in an attempt to spur economic growth. Continue reading...

Rolling coverage of the first full day of the World Economic Forum in DavosThere's drama inside the Congress Centre here at Davos, where two Greenpeace International activists have held a protest calling for wealth taxes.Two Greenpeace activists unveiled a banner reading Tax the Super-rich! Fund a Just and Green Future", above the main lobby near the WEF Congress Hall (where the big speeches take place).As the world faces increasing threats to democracy through the collusion of wealth and power, the urgency to tax the super-rich is ever increasing.Having billionaires in positions of leadership, governing with impunity, is a stark reminder of the dangerous intersection of extreme wealth and politics, and its impact on democracy, people and the planet." Continue reading...

Labour market figures add to dilemma for Bank of England as it considers interest rate cuts

European Commission president tells Davos that the bloc can no longer rely on rising tide of global trade'

We'd like to hear from those looking for work in the UK as well as from UK employers about their recent experiences of the labour marketBritain's unemployment rate has risen unexpectedly and the number of workers on payrolls has fallen by the most since the height of the pandemic, according to new figures from the Office for National Statistics (ONS).It estimated that the number of payrolled employees had shrunk by 47,000 in December, the biggest drop since November 2020. The jobless rate meanwhile increased to 4.4 per cent in the three months to November, up from 4.3 per cent in the three months to October. Continue reading...

Reports that government could weaken employment rights bill as NI rise prompts fears of redundancies

President's energy emergency declaration aims to usher in affordable and reliable American energy'Donald Trump signed a memorandum on inflation and multiple orders aimed at lowering energy prices, but the incoming president's advisers offered few details on the policies, raising serious questions about whether the new administration will be able to address one of Americans' most pressing concerns.During a press call on Monday morning, incoming White House advisers pledged that Trump would pursue an all of government approach to bringing down costs for American citizens" but they declined to outline concrete steps that the administration would pursue to lower prices. Continue reading...

The survey of chief executives, published ahead of the World Economic Forum, follows an upgraded growth forecast from the IMFThe UK is the second most attractive country for investment behind the US, signalling a climb up the rankings, according to an annual survey of global business leaders by the consultancy PwC.Published at the start of the World Economic Forum (WEF) in the Swiss ski resort of Davos, the survey of almost 5,000 chief executives from 109 countries puts the UK in second place, ahead of China, Germany and India. Continue reading...

Annual survey finds workers have multifaceted expectations' after changes cause by Covid pandemicWork-life balance has soared in importance for workers around the world, becoming their top motivator and pushing pay into second place, according to an annual international survey of thousands of employees.It is the first time that finding or keeping a job that fits in with the rest of their lives has outranked salary in the 22-year history of the international recruitment company Randstad's annual review of the world of work, highlighting the corporate revolution caused by the coronavirus pandemic. Continue reading...

Treasury orthodoxy is such that the chancellor doesn't seem to think she has a choice, writes Anthony Lawton, while Ros Wain says the government needs to get over the household view of the public finances. Plus a letter from Phil TateYour editorial (14 January) rightly critiques Rachel Reeves's adherence to Treasury orthodoxy. But the persistence of this framework goes deeper than institutional inertia. It reflects a failure to recognise a choice at all - and an inability to imagine and craft better alternatives.Treasury orthodoxy is rooted in the Thatcher-Reagan era. It is not just outdated, but has become invisible to those who wield it. Traditional economic training teaches policymakers to see fiscal discipline and market reassurance not just as good options but as the only ones. This narrow view blinds them to evidence that transformative public investment, targeted redistribution and state-led solutions can be essential to tackle inequality, stagnation and the environmental crisis. Continue reading...

WFH has harmed employee productivity, says Stuart Rose, who was also executive chair of Asda

Unlike tariffs, a new form of protectionism could target climate-wrecking, untaxed corporations and their billionaire owners

Number of homes new to market 11% higher than a year ago, despite uncertainty over interest rates and stamp dutyA record number of new sellers have come on to the UK housing market since Boxing Day, while the average price and the number of sales agreed also increased, pointing to a busier 2025, according to a report.The average price of a property coming to market rose by 1.7%, or 5,992, this month to 366,189, the biggest jump in prices at the start of the year since 2020, the property website Rightmove said in its monthly report. While prices usually bounce back in the new year after a seasonal fall in December, before Christmas, the rise was pronounced this month. Continue reading...

The annual gathering of the globally minded is looking forlorn in the light of Trump 2.0 and trade rowsThis year's week-long gabfest in the Alpine resort of Davos, which kicks off on Monday, will be held under the banner: A Call for Collaboration in the Intelligent Age".Given that it will open as Donald Trump is inaugurated with a promise to jack up import tariffs, trash the Paris climate agreement and put an anti-vaxxer in charge of the US health system, hopes of either collaboration or intelligence being much on display in 2025 appear bleak. Continue reading...

A new paper has found that social capital is the cake, not the icing' of a strong, well functioning economyWindfarms, train lines, science labs - when policymakers think about the ingredients for kickstarting the UK's sagging economy, they tend to imagine tangible bits of infrastructure. But two of the UK's most eminent public economists have banded together to urge Rachel Reeves to reconsider another dimension of the UK's makeup: social capital.Andy Haldane is the former chief economist at the Bank of England, now chief executive of the Royal Society of Arts. David Halpern is the man behind the so-called nudge unit, which brought behavioural economics into the policy mainstream. Continue reading...

Chancellor survives chaos in markets but faces more questions on growth, cuts, public sector pay and fraudRachel Reeves was given a warning this month how the most carefully plotted budget strategy can be blown off track by turmoil in financial markets.Calm has been restored, for the time being, but the lingering effect has been to increase the UK government's cost of borrowing. Continue reading...

The chancellor will seek investment in the UK as the Labour government prepares to reduce the benefits billA drive to reduce the benefits bill will be pursued by the government alongside a charm offensive to attract more companies to invest in Britain, amid nervousness in Labour circles over a new round of spending cuts.The chancellor, Rachel Reeves, will travel to the World Economic Forum's annual meeting in Davos this week in the hope of convincing some of the world's largest companies to invest, with allies saying she will use spending cuts rather than further tax increases to meet her own fiscal rules. Continue reading...

Some analysts fear ballooning federal debt and a bullish stock market means something will surely snap'Donald Trump's return to the White House on Monday has the world economy on tenterhooks. Could the 47th US president govern broadly as he did last time, when his most extreme threats were ultimately softened? Or is this time different?Corporate America's biggest beasts have cosied up to the president-elect, but there are also serious jitters on Wall Street, amid investor fears that Trump's most colourful campaign rhetoric will soon become a reality: risking a fresh inflation shock in the world's largest economy. Continue reading...

Nearly every share on index rose after fall in value of pound helped multinationals listed in LondonThe UK's blue-chip stock index has hit a record high, as hopes of interest rate cuts this year drove down government borrowing costs.Almost every share on the FTSE 100 rose on Friday, the fall in the value of the pound bolstering multinationals listed in London and propelling the index above 8,500 points for the first time. Continue reading...

Rolling coverage of the latest economic and financial news, as Britain's blue chip share index hits new peak of 8533 pointsThe FTSE 100 has hit a record high after a strong start to the year.Since the beginning of January, the index has climbed by 3.75%, adding to the 5.7% it gained during the whole of 2024. Continue reading...

Donald Trump's return to White House and Rachel Reeves's call for regulators to help drive UK growth taken into accountBusiness live - latest updatesThe Bank of England will further delay capital rules meant to prevent another 2008-style crash, as it weighs the impact of Donald Trump's return to the White House and the chancellor Rachel Reeves's call for regulators to help drive UK growth.The Bank's regulatory arm said it was delaying the date by which banks had to implement Basel 3.1 rules by a year, to January 2027. Continue reading...

UK economy predicted to grow by 1.6% this year as fund warns of potentially destabilising effect of Trump policy Business live - latest updatesThe International Monetary Fund has upgraded its forecast for UK growth this year in an update to its biannual assessment of the global economy, while taking a swipe at plans by Donald Trump's incoming US administration for the potentially destabilising effect of large-scale tax cuts, import tariffs and weaker regulations.In a fillip to the Labour government, the Washington-based organisation said it expected the UK economy to grow by 1.6% in 2025, up from an earlier forecast of 1.5%. Continue reading...

John Van Reenen believes he can help Labour solve the peculiar British problem' of chronically weak productivityThe economist John Van Reenen lacks the public status of Gordon Brown's two Eds" - Balls and Miliband - who ranged across Whitehall in New Labour's first term, enforcing the Treasury's will. But ask today's Labour apparatchiks about Rachel Reeves's approach to growth, which she will set out in a speech later this month, and they often point to the chair of her council of economic advisers.Currently on leave from the London School of Economics (LSE), where he ran the Centre for Economic Performance, Van Reenen has spent his professional lifetime probing the weak spots of the UK economy. Continue reading...

Latter part of 2024 recovered remarkably' after stimulus measures, says National Bureau of Statistics

Group led by ministers will include representatives of the judiciary, music industry, BBC and Football AssociationLeading cultural figures will be tasked with working alongside members of the royal family to boost Britain's international influence as part of the government's new soft power council".The group - which will be chaired by the culture secretary, Lisa Nandy, and the foreign secretary, David Lammy - will bring together experts from across culture, sport, the creative industries and geopolitics" to promote Britain globally and provide a boost to the UK economy, according to the Foreign Office. Continue reading...

Labour should ask the Bank of England if it can do more to boost growthRecent days of market turmoil have elicited some extraordinary responses. The fact that investors are demanding higher rates to lend to the UK government apparently puts this Labour government in the same position as Liz Truss in 2022, according to some Labour MPs, or as Denis Healey facing the International Monetary Fund in 1976. Others dub the UK's current position as stagflation, a term redolent of the 1970s, with their stagnant economy and runaway inflation.

Growth weaker than City forecasts but government says it's a step in the right direction'

Stocks extend rally; with inflation easing and sluggish economic growth, a February interest rate cut looks increasingly likely, analysts sayBritain's economy grew for the first time in three months, but eked out just 0.1% growth.The economy grew more slowly than expected in November, giving the Bank of England more room to cut interest rates this year.We know that in net terms growth remained flat for the three months to November therefore we are clearly far off from a state where the economy has reached escape velocity' and grows on a sustained basis.Given the latest inflation reading yesterday, weaker than expected growth could help pave the way for faster rate cuts by the Bank of England. This could be a helpful tailwind to the economy at a time when the international outlook becomes more unpredictable. Continue reading...

Bloc may ward off incoming president's threats by buying more US goods, or impose its own tariffs in retaliationIf there is one thing the EU knows about Donald Trump, it is that he loves tariffs. The incoming president has said tariff" is the most beautiful word in the dictionary" and has threatened to impose them on US allies around the world.On the campaign trail he proposed tariffs of 10-20% on imports from all countries, with a 60% rate reserved for China. Once elected, he tweeted that the EU must buy more US oil and gas otherwise it is TARIFFS all the way!!!" This week, he announced he would create an external revenue service" on the day of his inauguration. Continue reading...