The PM's admiration for Washington's economic model may backfire amid looming US banking and stock market disastersOne of the consistent themes of the Conservative economic narrative is an admiration for the US and its ability to grow quickly. The way it has bounced back from the pandemic and how it has ridden out the impact of Russia's invasion of Ukraine should serve as a blueprint.A neoliberal Conservative analysis puts the emphasis on tech, innovation and a myth-like entrepreneurial spirit that the UK would do well to emulate. What it ignores is the way the US economy zips ahead on fantastical stock market valuations and off-balance-sheet accounting reminiscent of the years before the 2008 financial crisis. And how both these habits could bite back in a big way, much as they did in 2008, and pretty soon. Continue reading...
Bulgaria's eternal optimist' in favour with European finance ministers after first five-year stint encompassing Covid and UkraineThe head of the International Monetary Fund, Kristalina Georgieva, will run for a second five-year term after being nominated by a string of European countries to lead the global lender.The Bulgarian economist and champion of policies to tackle the climate crisis will be given the support of her home country, which said she had accepted the nomination for another term starting in September. Continue reading...
Layoffs climb sharply with last month's rate the highest of any February since 2009 but expert says job gains remain solid'Employers added 275,000 jobs across the US last month, as the labor market continues to grow at a clip in the face of the high interest rates.Job growth exceeded expectations of 200,000 on Wall Street in February and rose from the previous month's revised rate of 229,000. Continue reading...
by Richard Partington, Kiran Stacey and Larry Elliott on (#6K601)
Economists say making the policy an election pledge could cost 40bn, which is badly needed for health, education and elsewhereRishi Sunak has been warned against fighting an election on an unfunded plan to abolish employee national insurance amid projections the move could blow a 40bn hole in the public finances.As the pre-election battle on the economy between the Conservatives and Labour intensified, the prime minister was on Thursday under mounting pressure to explain how the measure could be afforded while public services were crumbling. Continue reading...
Critics say extra funding to key battleground constituencies proves government happy to ignore regional inequality'The phrase levelling up" may once have conjured a vision of northern towns and cities scarred by deindustrialisation - but Jeremy Hunt's budget suggested the government's definition now stretches to Buckinghamshire, Canary Wharf and Cambridge.In the section of his speech on historic underinvestment in our nations and regions", Hunt hailed new devolution deals for Surrey and Buckinghamshire. Continue reading...
Office for Budget Responsibility says national insurance and tax cuts will be paid for by average 8bn-a-year borrowing to 2028-29The chancellor will raise government borrowing to help fund a 2p cut in national insurance contributions from April, according to an assessment of the spring budget by the Treasury's independent forecaster.The Office for Budget Responsibility said the chief measures to pay for Jeremy Hunt's budget measures, including the cut in national insurance and a reduction in capital gains tax, would come from an average extra 8bn of borrowing in each of the years to 2028-29. Continue reading...
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The Guardian's John Harris is joined by the former Conservative chief secretary to the Treasury David Gauke and the economist and Labour candidate Miatta Fahnbulleh to go through today's budget announcements Continue reading...
Headline cut to national insurance rate echoes measure taken in autumn statement, which made little impact on votersJeremy Hunt has spent weeks managing expectations over potential tax cuts in his spring budget, with Tory MPs desperately searching for ways to avoid election defeat as household finances buckle under a record tax bill and the cost of living crisis.As the chancellor's fiscal headroom shrank in the run-up to the budget, so did his plans for spending in areas such as housing and defence, as he promised he would not take any risks" with the British economy despite all the political pressure. Continue reading...
How Hunt's measures on tax, NI and benefits affect single people, couples and those receiving pensions in England, Wales and Northern Ireland Continue reading...
These latest tax cuts were not the gamechanger the Tories need before the electionJeremy Hunt is in favour of delaying the election until the autumn, and it showed. His second budget had all the hallmarks of a holding operation from a government hoping the summer will bring better economic news and leave open the possibility of another package of measures in six or seven months' time.Sure, there was the much-heralded cut in national insurance contributions, which formed the biggest chunk of a front-loaded 14bn stimulus package. Certainly, he took every opportunity to have a pop at Labour in a deeply political speech. This will be the last budget before the election, but it did not feel like the last roll of the dice for the government. Continue reading...
In today's newsletter: As the chancellor presents a plan aimed at satisfying the Tory faithful, we look at what he will do and what it will mean for you Sign up here for our daily newsletter, First EditionGood morning, and strap on your Homer Simpson secret nap spectacles: it's budget day. Coming into this one, the big question about Jeremy Hunt is this: is he, as friends of his recently told the FT, realistic enough to know he is unlikely to be chancellor this time next year" - or does he think that his decisions today can give the Conservatives a serious chance of winning the election? Does he want to bolster his economic legacy - or give his many vulnerable backbenchers something to tell voters about?The truth is likely to be somewhere in the middle: tax cuts to satisfy the Tory faithful, with just enough cover on affordability to keep fiscal watchdog the Office for Budget Responsibility (OBR) happy. Today's newsletter is a simple guide to what that means: what the chancellor will do, the dubious sums that will help him afford it, and what it'll mean for you. Here are the headlines.US politics | Joe Biden and Donald Trump cruised to easy victories on Super Tuesday, as both men piled up delegates on their way to their parties' nominations for the presidency. While Nikki Haley did win the Republican primary in Vermont, that was her only success against Trump, and she came under renewed pressure to drop out of the race.Birmingham | Councillors in Birmingham have approved what are thought to be the biggest budget cuts in local authority history. 600 council jobs are under threat, with libraries closed, bin collections reduced, street lights dimmed, and arts grants scrapped. The council also approved a 10% council tax increase for the upcoming financial year.Israel-Gaza war | Negotiations aimed at brokering a ceasefire in the Israel-Gaza war appear to have stalled, days before an unofficial deadline of the beginning of Ramadan. Israel did not send a delegation to the second day of talks in Cairo as hoped, demanding that Hamas present a list of hostages who would be the first to be released.UK politics | Michelle Donelan, the science minister, has apologised and paid damages after accusing two academics of sharing extremist views" and one of them of supporting Hamas. Donelan - whose department covered the damages and legal expenses - had faced a libel action after her allegations led to the two academics' suspension from roles at Research England.Monarchy | The army has removed a claim on its website that the Princess of Wales will attend an event in June, after apparently publishing the information without approval from Kensington Palace. Catherine has been recovering from abdominal surgery for the past seven weeks, with no date yet given for her return to public duties. Continue reading...
Vast majority of parents in survey say they cannot make the new system workStruggling single parents are being punished" and set up to fail by an unrealistic" government policy that forces them into near-full-time work when their children turn three, according to parents and new research.A year after the chancellor, Jeremy Hunt, forced parents on benefits to work for 30 hours a week or risk seeing their benefits docked, the vast majority of parents say they cannot make the new system work. Continue reading...
Whatever Jeremy Hunt says, traders know the rich will get richer and the poor will get poorer. And they're paid millions to bet on itIn May 2010, I lost $8m in a week. I was 23 years old. Back then, I was an interest rates trader for Citibank in Canary Wharf. I had won that job only three years earlier in a card game while I was a maths student at LSE. At that time, the job was the culmination of a lifetime ambition. It was also an escape route from poverty.What do you do when you are 23, and you have just lost $8m? And you know that if you let slip a few dollars more, you will also lose your job? I did what anyone else would do. I worked. I started bringing my old economics textbooks on to the trading floor, and studied them into the evenings. I wanted to understand where I'd gone wrong. Continue reading...
Global gender gap is far bigger than previously thought, as annual World Bank report takes childcare and safety issues into account for first timeNo country in the world affords women the same opportunities as men in the workforce, according to a new report from the World Bank, which found the global gender gap was far wider than previously thought.Closing the gap could raise global gross domestic product by more than 20%, said the report. Continue reading...
The Treasury watchdog is seen by some Tories as a block to tax cuts - and could be ignored by Jeremy HuntIt has been described as a millstone around the chancellor's neck and the reason Conservative MPs could be disappointed by Jeremy Hunt's budget on Wednesday if he spurns their demands for large pre-election tax cuts.After coming under intense criticism during Liz Truss's premiership, the Office for Budget Responsibility (OBR), the Treasury's tax and spending watchdog, is once again under fire. Continue reading...
Democratic senator Sherrod Brown endorsed the Sesame Street star's complaint on products getting smaller as prices remain sameThe Ohio Democratic senator Sherrod Brown endorsed a key voice in the American public square - Cookie Monster - in a complaint about shrinkflation.Me hate shrinkflation!" the Sesame Street character posted on social media on Monday, referring to an economic phenomenon Merriam-Webster defines as the practice of reducing a product's amount or volume per unit while continuing to offer it at the same price". Continue reading...
High street shops, pubs and restaurants lose out as Britons relax on the sofa in FebruarySoggy February weather and continued cost of living pressures put a dampener on retail sales last month, with growth slowing to just over 1% as many households saved cash by snuggling up on the sofa.Sales of non-food items slumped by 2.5% in the three months to February - led by declining demand for footwear, household appliances, furniture and clothing - amid weak consumer confidence, according to the latest retail sales monitor from the British Retail Consortium (BRC) and the advisory firm KPMG. Continue reading...
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Growing numbers of people are leaving the jobs market because of long-term illnesses. It's coming at a huge personal and national cost, says economics editor Larry ElliottNew figures from the Office for National Statistics suggest there are 2.8 million people classified as not looking for work because of health issues - up from the 2.6 million previously estimated and a one-third increase on the 2.1 million before the Covid-19 pandemic.As the Guardian's economics editor, Larry Elliott, tells Hannah Moore, this is a shocking rise and each of those people will have individual and often complex circumstances. There is no easy fix. But it is a situation that has not appeared out of nowhere: while the Covid pandemic has clearly had a huge effect on physical and mental health, many of the underlying trends have been clear for decades. And NHS waiting lists have tripled in length since the Conservatives took over in 2010. Continue reading...
by Richard Partington Economics correspondent on (#6K2EF)
Despite levelling up efforts, EY data found the capital and south-east of England would benefit most from a return to growthFewer than 20% of levelling up projects finished in EnglandBritain's sharp regional divide is on track to deepen with London's economy pulling further ahead despite the government's levelling up promises, according to a report.Ahead of Chancellor Jeremy Hunt's budget on Wednesday, the accountancy firm EY said it was forecasting stronger economic growth in London and the wider south-east of England than for the rest of the country. Continue reading...
The chancellor is prepared to inflict yet more austerity to pay for a budget bribe. But the UK needs more spending, not lessWhen I was young, it grew on me by the minute
By taking money to fund tax cuts, the chancellor's policy will be as disastrous as that of his predecessorsJeremy Hunt should be honest with MPs and the British public when he delivers his budget on Wednesday. Early in his speech, the chancellor should admit that almost 14 years of successive Conservative administrations have left the economy and the public finances in a far worse position than many of our competitors among the other major industrialised nations.There is the proliferation of food banks and the growing number of homeless people sleeping in shop doorways, alleys and in the woods on the edge of town. Hundreds of schools cannot cope with the growing numbers of pupils who struggle to learn. Local authorities are running out of cash at an alarming rate, and hospital, GP and dentistry services have narrowed the scope of who they cater for and many are dealing only with emergency cases. The police services are struggling, the asylum system remains a shambles, and prison governors complain that the ageing infrastructure and poorly paid staff mean they barely look after the number of prisoners in their care. Continue reading...
Former Treasury aides say the chancellor is courting danger on UK debt and that fiscal rules must goLeading economists warn today that Jeremy Hunt will cost the country dear" if he gambles on pre-election cuts to tax and spending in this week'sbudget.Two former advisers to the Treasury, backed by other economists, said that instead of decisions aimed at sabotaging prospects for the next government", the chancellor should focus on the long-term national interest with measures to spur investment and growth. Continue reading...
Before an election, chancellors often try to woo voters with tax cuts that leave the incoming government in a hole. Here are six poison pill' speechesThere are budgets that fall apart within minutes of the chancellor delivering his Commons speech: think of George Osborne's pasty tax, one of many missteps that meant his 2012 budget will be forever known as an omnishambles.Then there are the poison pill" budgets: the ones that come at the end of a parliament, when the chancellor of the day goes for broke - sometimes literally - to attract voters and attempt to stay in office. If their party loses, the opposition is left to clean up the mess. Continue reading...
by Robert Booth Social affairs correspondent on (#6K1HV)
David Willetts suggests policy would help spread wealth among millennials amid deepening inequalitiesMinisters should hand all 30-year-olds a 10,000 citizens inheritance" amid fears a 1.5tn wealth transfer to millennials will deepen inequalities, a Conservative peer has urged.David Willetts, who leads the Intergenerational Centre thinktank, called for the next government to implement a major new policy to spread wealth in Britain. Continue reading...
by Richard Partington Economics correspondent on (#6K1HZ)
From a huge budget deficit to weak GDP and a record rise in tax, we look at the background to the Tory budgetJeremy Hunt will attempt to use next week's budget to reboot the Conservatives' flatlining performance in the opinion polls before the next general election, with the chancellor widely expected to announce sweeping tax cuts.But while Rishi Sunak will be hoping his chancellor delivers a near-term bounce from crowd-pleasing giveaways, his government is facing growing pressure over the Tories' management of the economy over the past 14 years. Here are 10 charts outlining the Conservatives' record since 2010. Continue reading...
As the chancellor prepares next week's budget, Labour says it is staring at a dire inheritance. The voters look likely to agreeThe past 14 years have been a white-knuckle ride for the British economy. Record low interest rates, money creation from the Bank of England on an industrial scale, Brexit, millions of workers furloughed during the pandemic, the biggest fall in output in at least a century - all that, and a record number of people inactive through long-term ill health. Boring it hasn't been.At the end of it all, there is a sense of deja vu as Jeremy Hunt puts the finishing touches to next week's budget. When Liam Byrne departed the Treasury in 2010 he left a note - meant as a joke - for his successor as chief secretary, which said: I'm afraid there is no money." After almost a decade and a half of economic underperformance, Byrne's words have come back to haunt the Tories.Economists say George Osborne blundered when he imposed severe austerity measures on a still-fragile economy Continue reading...
The president wants young voters to know he hasn't given up on fixing student debt - but convincing them he has a decent track record is proving challengingMaxwell Frost, the only gen Z member of Congress, was front and center when Joe Biden announced last week that he was canceling $1.2bn of student loan debt for more than 150,000 Americans.President Biden knows that canceling student debt is an important issue for young people across our country," said Frost, who has been a surrogate for Biden's campaign. The president's actions on student debt are in stark contrast with Donald Trump, who spent his entire time in office sabotaging efforts to aid borrowers who are just trying to make ends meet." Continue reading...
Ex-Treasury official and adviser to David Cameron will replace Ben Broadbent, making MPC majority female for first timeThe Bank of England's interest-rate-setting committee is set to become majority female for the first time, after the appointment of a former key adviser to David Cameron and George Osborne as one of its deputy governors.Clare Lombardelli, the chief economist at the Organisation for Economic Co-operation and Development (OECD), will sit on the nine-member monetary policy committee (MPC) when she joins as the Bank's next deputy governor for monetary policy. Continue reading...
Dr Angus Holford, Dr Greta Morando and Dr Julian Costas-Fernandez respond to news about falling numbers of overseas students coming to BritainThe focus of recent articles on international student numbers (Warnings of economic damage to UK as international student numbers fall by a third, 29 February; Are international students taking over UK universities? No - in fact, they're propping them up, 31 January) has been on their overall value to the UK economy or to universities' financial positions, or their impact on opportunities for British students. But it's also fair to ask what impact they have on the British students that they studyalongside.Our recent peer-reviewed study looked at the entire English higher education system and found that having foreign peers has zero impact on how likely home students are to graduate or how well they do in their degree, and noimpact on their chances of finding employment afterwards. Continue reading...
Stephen Moore, who withdrew from Fed consideration after sexist remarks were uncovered, co-author of radical Project 2025 effortStephen Moore, a conservative economist whose controversial remarks about women cost him a seat on the Federal Reserve board in 2019, is now co-author of a plan to radically reform the US treasury as part of Project 2025, a vast rightwing effort to advance radical policy proposals for Donald Trump's possible White House return.Project 2025 is all about forcing a far-right agenda on to everyday Americans," said Tony Carrk, the executive director of the progressive watchdog Accountable.US, which produced an extensive report on Moore's views and positions. Continue reading...
Our nightlife isn't universally suffering. What it needs is participation, not elegiesHaving fun is big business. Without the factories and mills that first drew hundreds of thousands to towns and cities, today's modern metropolis is expected to sustain itself and its residents through the manufacturing of leisure and the commodification of a good time. The zeitgeist phrasing is telling: the night-time is now its own economy - one worth an estimated 66bn in the UK. Cities are no longer expected to sleep - sleep is wasted consumption time, after all. But from nightclubs to pubs and restaurants, the story being told about British nightlife is clear: it is in deep trouble.A report published this month by the Night Time Industries Association (NTIA) looked into the economic and cultural impact of electronic music in Britain, and found that - while it is thriving on digital platforms, at festivals and in terms of global impact - the bricks-and-mortar world of clubland is in crisis. And what is dance music without any dancefloors?Dan Hancox is a freelance journalist, focusing on music, politics, cities and culture. His new book, Multitudes: How Crowds Made The Modern World, is published later this year Continue reading...
Economics | The Guardian