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Updated 2024-03-29 00:45
Labour’s mixed messages on £28bn green pledge put it in worst of all worlds
Tories watch on delighted as Starmer repeats figure while the shadow Treasury team distance themselvesFor weeks, Labour officials have been locked in meetings as they try to figure out how to present Westminster's worst kept-secret: Keir Starmer's slow U-turn away from his pledge to spend 28bn a year on the green economy.Publicly, senior party figures insist that nothing has changed since last summer, when the shadow chancellor, Rachel Reeves, said the party would spend 28bn only if the party's strict fiscal rules allowed. Continue reading...
Joe Biden declares America’s economy ‘is the strongest in the world’ after jobs report smashes forecasts – as it happened
Rolling coverage of the latest economic and financial news, as US adds 353,000 new jobs in January
Biden hails robust jobs market as proof US economy is ‘strongest in the world’
US adds 353,000 new jobs over month as growth in hiring gives boost to president, whose polling on economy has remained weakJoe Biden declared the strong jobs figures released on Friday as proof that America's economy is the strongest in the world".The US jobs market defied fears of a downturn again, when figures were released on growth in January, with employers adding 353,000 new jobs over the month, the labor department announced. Continue reading...
Will the ‘sick man of Europe’ label stick to Germany this time around?
Its growth model seems kaput - but optimists point to how the economy confounded critics beforeGermany is struggling. Its economy has shown no growth in the best part of two years. Its infrastructure is badly in need of modernisation. There are strikes on the railways. Protesting farmers have brought Berlin to a standstill. Deutsche Bank is cutting thousands of jobs. School standards are slipping. There is growing support for parties of the hard left and hard right. For the second time in a quarter of a century it is being labelled the sick man of Europe.Germany has a history of economic problems breeding political extremism but talk of a return to the Weimar Republic is wildly overblown. The economy is flatlining, not collapsing. There is nothing to match the hyperinflation of 1923 or the mass unemployment of the early 1930s. Continue reading...
Stop looking for loopholes, UN warns, after Saudi hints end of fossil fuels ‘just one option’
UN climate chief says torrents, not trickles' of public and private finance needed to meet global challengeGovernments must not try to pick loopholes in the global agreement to transition away" from fossil fuels reached last December, the UN's climate chief has said, as he called for torrents" of cash for poorer countries to tackle the crisis.Some countries have sought to play down the significance of the deal reached at the Cop28 UN climate summit in Dubai, the first time that governments have made such a pledge on oil and gas. Continue reading...
Don’t count on a soft landing for the world economy – turbulence is ahead | Kenneth Rogoff
Experts seem optimistic but events in China, Europe and the US suggest risks are still tilted to the downsideA month into 2024, the consensus forecast for the global economy remains cautiously optimistic, with most central banks and analysts projecting either a soft landing or potentially no landing at all. Even my colleague Nouriel Roubini, famous for his bearish tilt, regards the worst-case scenarios as the least likely to materialise.The CEOs and policymakers I spoke to during last month's World Economic Forum (WEF) in Davos echoed this sentiment. The fact that the global economy did not slip into recession in 2023, despite the sharp rise in interest rates, left many experts upbeat about the outlook for 2024. When asked to explain their optimism, they either cited the US economy's better-than-expected performance or predicted that artificial intelligence would catalyse a much-hoped-for productivity surge. As one finance minister remarked, If you are not naturally optimistic, you should not be a finance minister." Continue reading...
Labour rules out raising corporation tax above 25% in next parliament
Shadow chancellor Rachel Reeves tells business summit of measures to boost investment, productivity and certaintyLabour will not raise corporation tax above its current rate of 25% during the next parliament, the party has pledged, in an attempt to offer businesses greater certainty - but the promise has prompted warnings about a lack of fiscal flexibility.The shadow chancellor, Rachel Reeves, said the tax pledge included maintaining full expensing, which allows businesses that invest in IT equipment and machinery to claim back up to 100% of the cost of the investment by writing it off against tax on their profits. Continue reading...
Starmer says Labour would level up workers’ rights in way not attempted for decades – as it happened
Labour leader tells conference that reforms may not please everyone in room'The UK needs a government guided by clear purpose, Reeves says.Labour has set out five missions. But they are all tied to the economic mission - to raise growth.These are the symptoms of economic decline. Continue reading...
Bank of England governor says ‘things are moving in the right direction’ after leaving interest rates on hold – as it happened
BoE policymakers were split three ways over interest rate decision, as Andrew Bailey says Bank needs to be more confident that inflation will fall and stay low
The damning truth about the UK’s 2% inflation target: it’s completely made up | Louis-Philippe Rochon
So much pain is inflicted in the name of this figure. But was it ever more than an arbitrary choice?
UK interest rates have peaked, the next move is down … but not yet
Bank of England's rate-setting panel is split three ways - to hike, cut or hold -but analysts are now pencilling in a cut for late springInterest rates have peaked. The next move in borrowing costs will be down. But not yet. Those were the three key messages from the Bank of England in its latest assessment of the state of the economy.Those conclusions may not be immediately apparent from the minutes of the latest meeting on Threadneedle Street of the monetary policy committee (MPC) - the body tasked with setting interest rates to hit the government's 2% inflation target - because the MPC had a three-way split. Continue reading...
Bank of England sticks with 5.25% interest rate but hints at coming cut
Inflation forecast to temporarily fall below 2% in May as policymakers' vote on base rate splits three ways
Jeremy Hunt plays down talk of spring budget tax cut after IMF warning
Chancellor says less room now for giveaway in March despite being widely thought to be gearing up for cutsThe chancellor, Jeremy Hunt, has said there will be less room for tax cuts in the spring budget next month, just days after the International Monetary Fund warned that the UK needed to focus on repairing its public finances.Hunt, who in November announced he was cutting the main rate of national insurance contributions paid by employees from 12% to 10%, was widely believed to be gearing up for another tax giveaway after dropping a series of hints about what could be the Conservatives' last budget before a general election. Continue reading...
Bank of England expected to hold rates and warn on inflation
Wage growth fears likely to make Bank policymakers wait before cutting interest rates from 5.25%Bank of England policymakers are expected to hold interest rates at 5.25% when they meet today, but a rapid fall in inflation could mean a cut in the cost of borrowing comes as early as June.Analysts said revised forecasts for inflation were likely to show a steep drop in prices growth over the next six months, prompting bets in financial markets that the Bank's monetary policy committee (MPC) will make several cuts to interest rates in the second half of the year. Continue reading...
Federal Reserve continues to hold interest rates at 23-year high
Central bank said it was not appropriate to cut rates until it has greater confidence that inflation is moving sustainably toward 2%'The US Federal Reserve held interest rates steady for another month as the US inflation rate continues to fade from its highest level in a generation.Policymakers at the central bank, who have signaled they expect to cut rates three times this year, opted to keep rates steady at a 23-year high after their first two-day meeting of 2024. Continue reading...
The Guardian view on Rishi Sunak’s tax plans: stop trying to buy votes | Editorial
The IMF is right: Downing Street is taking a foolish risk by putting tax cuts before public spendingThe anti-growth coalition", as it was named by LizTruss during her brief premiership, just keeps on growing. The latest to sign up is the International Monetary Fund (IMF), which has this week warned Rishi Sunak off cutting taxes and suggests instead a boost to public spending. It is atimely intervention. For the past fewmonths, the right of the increasingly rightwing Tory party, including Ms Truss, has clamoured for lower taxes - supposedly in the name of economic growth, but more likely in the desperate hope of electoral survival.Mr Sunak has made it clear that he will indulge them, promising more to come" on tax cuts. January began with a slice taken off national insurancecontributions, and the debate around the March budget is not whether taxes will be cut but which ones are for the chop. Now along comes the IMF to wag an admonishing finger - and every British prime minister from Jim Callaghan onwards knows you don't want one of those.Just because the IMF says something, it ain't necessarily so. In 2011 John Lipsky, then its acting managing director, flew to London to support GeorgeOsborne's austerity plans. Two years later, its boss, Christine Lagarde, pulled a swift U-turn, and warned that spending cuts were tanking the economy. The verynext year, in 2014, she U-turned again, claiming the UK was doing well. The reality is that ever since Britain's bubble economy went pop in 2008's crash, growth has been utterly anaemic. The financial crisis that the IMF did not spot produced a badly ailing economy, which the IMF signed off as being in good health. This in turn bred a crisis of cynical, extractive politics, at which IMF officials are doubtless appalled. Continue reading...
If Britain’s richest 10% feel they are ‘struggling’, imagine life for the rest | Letters
Jennifer Brown, Nicole Robinson, Chris Tapp and Berty Dodd respond to an article by Anoosh Chakelian on skewed perceptions of wealthI found it strangely reassuring to read Anoosh Chakelian's article (Britain's richest 10% don't think they're wealthy - and that's disastrous in the fight against inequality, 24January). If nothing else, the article validated my own frustration at the situation. My partner and I earn about the average salary each and can manage, but certainly not live in luxury. We think about every purchase, and don't waste, while we try to build our savings to the point that we can afford to adopt children. Two recent conversations with friends earning 80,000 and 100,000, in which they discussed struggling and being working class, were painful and have been echoing in mymind ever since.I am a social worker, so I see the cold face of poverty constantly - the types of situations where a family doesn't know whether to heat or eat. I would never describe my family as struggling. But my friends truly think they struggle as they manage their two very large mortgages, and worry about whether their next holiday will need to be a bit cheaper than the Maldives. I have no answers to this problem, other than to show them my take-home pay and watch as they imagine living on that, then break the news that the minimum wage pays half. They immediately thought-block, though, and tell me about the benefits those people get. I feel a bit hopeless, if I'm honest.
UK house prices rise in January, Novo Nordisk obesity drug sales surge – as it happened
Nationwide says housing market looks more positive' as prices rise 0.7%; the Danish maker of Ozempic and Wegovy predicts further strong growth in 2024The Guardian's political correspondent Aletha Adu has sent over some reaction to Labour's announcement that it won't reinstate the cap on bankers' bonuses if it wins the next general election.Momentum, a grassroots organisation of the party's leftwing, said:This is a terrible decision totally out of touch with Labour's values and public opinion. For over forty years our economic model has sucked wealth from the country & enriched a few in the City.It even crashed the economy in 2008. Yet instead of learning the lessons from New Labour's failures, Starmer & Reeves seem determined to repeat them.We're absolutely delighted with the RSV launch, in four months reaching blockbuster status.We're very optimistic about the long term prospects of this asset being at least 3bn. We're only 11% penetration so far in the US. We do expect 24 to be a year of good growth as we continue to drive penetration. We're excited about being able to hopefully add a further cohort of the 50 to 59 year olds.It will take a few years to get there, to get to the kind of the flu rates which are closer to 60%.And in the UK, we do have the vaccine approved privately. What we're looking forward to is to be able to get to national immunisation programmes. Continue reading...
UK risks steep decline without £28bn green economy pledge, Labour warned
Business leader says investment in low-carbon economy is absolute minimum', a view echoed by other experts
How UK’s new border controls will affect plants and animal imports
Today is first stage in a series of changes likely to raise costs for businesses and consumersToday will bring the first stage in new, wide-ranging Brexit border controls on the import of plants, animals and food to the UK from the European Union.The changes, the most significant for importers since the UK left the single market three years ago, are poised to have huge ramifications for businesses that rely on imports from the continent. Continue reading...
IMF warns Jeremy Hunt against tax cuts in budget
Lower tax levels may not be possible without extra borrowing or post-election spending reductions, says Washington-based bodyThe International Monetary Fund has issued a strong warning to Jeremy Hunt against cutting taxes in his budget in March, stressing the need to boost key areas of public spending instead.In updated forecasts for the UK and the rest of the global economy, the Washington-based fund doubted whether the widely anticipated tax cuts would be possible without extra borrowing or post-election spending cuts. Continue reading...
Green economy must be next UK government’s No 1 priority – Lane Fox
Exclusive: British Chambers of Commerce head urges parties not to backtrack on eco pledges in run-up to general electionBritain's next government should make the transition to a green economy its No 1 priority to reboot economic growth and avoid falling behind rival nations, the head one of the country's most powerful business groups has said.Urging the Conservatives and Labour not to backtrack on environmental promises to score points in the general election campaign, Martha Lane Fox, the entrepreneur and British Chambers of Commerce president, said there was a danger of politicians creating a significant brake on progress" by politicising climate goals. Continue reading...
IMF warns Hunt against tax cuts; eurozone avoids recession – as it happened
Rolling coverage of the latest economic and financial news, as the eurozone stagnates in the final quarter of 2023
From Kirklees to Croydon, some historic buildings English councils could sell
Local authorities are thinking of plugging budget shortfalls by raising millions selling off public assets
Eurozone narrowly avoids recession as German economy shrinks
Single currency zone's stagnating GDP figure will add to pressure for ECB interest rate cut
Move to sustainable food systems could bring $10tn benefits a year, study finds
Existing production destroys more value than it creates due to medical and environmental costs, researchers sayA shift towards a more sustainable global food system could create up to $10tn (7.9tn) of benefits a year, improve human health and ease the climate crisis, according to the most comprehensive economic study of its type.It found that existing food systems destroyed more value than they created due to hidden environmental and medical costs, in effect, borrowing from the future to take profits today. Continue reading...
Thinking small may get Labour into No 10. It could also stop it staying there | John Harris
Unlike Brown and Blair, who made bold changes early on, Starmer seems determined to offer as little as possibleIn about 10 days' time, we are told, the deadline will fall on policy submissions for Labour's draft manifesto. Reports over the weekend have highlighted senior party people insisting that a May election is still a big possibility, and fretting about a contest that could be called as early as 16 March. And besides, Keir Starmer's accelerated timetable suits his marketing as the kind of leader keen on preparedness, prudence, and technocratic efficiency.At which point, an inevitable warning: the content of Labour's plan for government, in all likelihood, is not going to be terribly spectacular. To no one's surprise, Starmer's advisers have been briefing journalists that financial discipline will run through the document". Proposals that have come out of Labour's policy forums will seemingly be ruled in or out depending on whether they can stand up to Tory attacks. The only extra taxes in play - on non-doms, private schools and private equity dealmakers" - will raise less than 10bn a year, which also puts a lid on any big policy ambitions. To cap it all, after months of briefings about its possible demise, the party's plan to spend 28bn a year on green investment may well be even further diluted and delayed.John Harris is a Guardian columnist Continue reading...
Governments facing wipeout will always cut taxes but there are better uses for UK’s £20bn windfall | Larry Elliott
Instead, Jeremy Hunt could shelve plan to cut public investment or repair welfare safety net
To get to net zero, we may have to sell off the UK’s future
The cost of decarbonising is vast. Something like the privatisations of the 80s may be needed to raise enough fundsIf Labour forms the next government, as polls suggest, it must provide the private sector with the kind of incentives that will lift investment in Britain's economy, making it more productive and environmentally friendly. Joe Biden has done it for the US. Why not Keir Starmer in the UK?Transforming the economy will come at an outsize cost. Worse, it's an escalating cost that is way beyond the public finances of Britain and possibly even the EU. Continue reading...
‘Now even smaller’ and ‘All new, worse recipe’: these are the labels you won’t see on food – but you should | Hilary Osborne
Firms that trumpet larger packets and improved formulas should also be frank about the shrinkflation that is giving the consumer lessNew improved recipe!" Now with more cheese". Manufacturers and retailers have long been swift to announce with fanfare some changes to their products, but there are others they would prefer you didn't notice. Smaller pack sizes and changes in ingredients to reduce the cost of production - both unheralded - confront the consumer, but unless you look closely you might not know. That's the intention.There are the packs of butter that have shrunk from 250g to 200g without the change being advertised, catching out bakers in the process; the dwindling pet food pouches that left cat owners wondering why their moggies were miaowing for more; the olive oil spread that goes by the same name despite the headline ingredient being halved.Hilary Osborne is the Guardian's consumer and money editor Continue reading...
UK ditches post-Brexit Canada trade talks; Vodafone and Three UK merger under investigation – as it happened
Live, rolling coverage of business, economics and financial markets as Canada says UK was unwilling to give access to agricultural products
Hope fades for cut in interest rates for industrialised nations
US Federal Reserve expected to hold rate, ECB says talks on reductions premature, and Bank of England could delay change until summerThe prospect of early interest rate cuts this year across leading industrialised nations received a blow on Thursday after figures showed the US economy grew at a faster pace than expected last year.A stronger than forecast increase in US gross domestic product (GDP) of 3.3% last year dented hopes in the US, while the European Central Bank hinted at delays to the first cut in the cost of borrowing. Continue reading...
US economic growth ends 2023 with surprising strength
Growth slowed far less than expected in last three months of 2023 and gross domestic product grew at annualized rate of 3.3%The pace of US economic growth slowed in the last three months of 2023, but far less than had been expected, underlining the continued resilience of the economy.The commerce department reported on Thursday that US gross domestic product (GDP) - a broad measure of economic health - grew at an annualized rate of 3.3% in the final quarter of the year, down from 4.9% in the previous quarter but in line with pre-pandemic growth, and well ahead of the 2% economists had expected. Continue reading...
‘It’s going to be tough’: the impact of war on Israeli lives and businesses
Despite signs of revival, the true costs of conflict are impossible to calculate because no one can say how long it will lastCafe Merkaz is busy. A handful of patrons sit at its half dozen tables on Jerusalem's Hanevi'im Street on a sunny lunchtime, while inside the coffee grinders grind and a pile of sandwiches on the counter shrinks hour by hour.A month or so ago, things looked pretty desperate. But we had twice as many people through the door this morning by 10am as we had in entire days back then. Now I think the year is just going to be tough, but we'll hang on," said Yaakov Saly, the 27-year-old owner. Continue reading...
Queensland residents brace for cyclone – as it happened
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Labour and Tories need to be honest about economic trade-offs, says IFS
Thinktank calls on parties to level' with voters about difficult tax and spending decisions before next electionBritain's next government faces some of the toughest tax and spending choices for generations as it will be forced to grapple with the impact of weak growth and high debt interest payments, a leading thinktank has said.The Institute for Fiscal Studies (IFS) warned that Jeremy Hunt's much-predicted budget tax cuts risked being reversed or paid for by spending cuts, and urged the Conservative and Labour parties to level" with voters before polling day.A large cut to public investment over the rest of the decade, which would still fall even if Labour's planned spending on its green prosperity plan was taken into account.Tough funding constraints, with concentration of spending on priority areas such as the NHS, schools and defence, implying cuts of 20bn in other unprotected departments.Plans by both parties to cut net migration to the UK had implications for the social care and higher education sectors, and neither party had talked about the higher care costs or the higher tuition fees for domestic students that would result from cutting numbers.Progress towards achieving net zero had involved picking most of the low-hanging fruit and the next steps - such as reducing emissions from buildings - would involve short-term costs on businesses and consumers.Spending on disability benefits was rising fast and required urgent attention, but previous efforts to rein in spending had struggled to achieve the stated objectives, while any general promises to cut spending would need to be accompanied by specific details as to who would lose out. Continue reading...
UK factories hit by Red Sea crisis, but recession could be avoided – as it happened
Manufacturing supply chains were impacted by longer wait times for container freight during January in the wake of the Red Sea crisis
UK factories cut production for 11th month in a row amid tensions in Red Sea
Dominant services sector expanded more than expected, boosting overall outlook for British economy, according to surveyUK factories entered the new year cutting production and investment in a sign that rising tensions in the Red Sea are harming the ability of manufacturers to end almost a year of contraction.Factory owners reported import price rises and delays to exports that forced them to reduce output in January for an 11th consecutive month, according to a leading business survey. Continue reading...
Chinese markets rally on report Beijing considering £222bn state rescue plan
Authorities could use 2tn yuan from offshore accounts of state firms to buy shares after big falls in stocksChinese markets have lifted following a report suggesting that Beijing policymakers are scrambling to mobilise billions of yuan from state-owned enterprises to reverse a recent share rout.The benchmark CSI 300 index, which replicates the top 300 stocks traded on the Shanghai and the Shenzhen bourses, had fallen to a five-year low, while the Hang Seng China Enterprises Index, which tracks Chinese stocks traded in Hong Kong, had dropped to its lowest in nearly two decades. Continue reading...
Hundreds of millions of pounds extra investment needed in Tata steel, Welsh economy minister warns – as it happened
Rolling coverage of the latest economic and financial news, as steel workers head to parliament to press MPs over job cuts at Port Talbot
Jeremy Hunt has room for £20bn tax cuts after borrowing halves year on year
December deficit is less than expected at 14bn - the lowest for the month since 2019
UK roads being built without ministerial oversight, say environment campaigners
National Highways pushing ahead with projects behind wall of secrecy'Government-funded road schemes worth up to 500m are being built without ministerial oversight and most likely based on outdated emissions targets, according to freedom of information requests obtained by environmental campaigners.National Highways is the body that oversees road building in England, and it is being allowed to mark its own homework" by ministers who have opted out of reviewing the economic case for new projects, say campaigners. Continue reading...
Mr Kipling maker to cut more prices after bumper festive sales
Premier Foods makes reductions on some lines but increases cost of own-brand products it makes for retailersThe maker of Batchelors Super Noodles and Angel Delight has extended promotional price cuts to more products, including Loyd Grossman cooking sauces and Mr Kipling Bakewell slices.However, Premier Foods is continuing to increase the cost of the own-brand products it makes for retailers and the food ingredients it supplies them, adding to inflation in shoppers' baskets. Continue reading...
London outpacing other UK cities on services exports, report says
Capital accounts for almost half of sector's exports and action needed elsewhere, says Resolution FoundationLondon is capturing an ever-bigger share of the UK's record service sector exports and government action is needed to ensure other big cities keep pace with the capital, a report says.The Resolution Foundation said London accounted for almost half of the UK's service sector exports, with its share of the total rising from 38% to 46% between 2016 and 2021. Continue reading...
Escaping poverty has become much harder in past two decades, report says
Six million of the poorest people would need more than double their incomes to move out of hardship, says Joseph Rowntree FoundationEscaping poverty has become significantly harder over the past two decades, with progress to eradicate hardship in Britain having stalled under the Conservatives since 2010, a major report has warned.The Joseph Rowntree Foundation (JRF) said levels of hardship had deepened for millions of people across the country since the mid-1990s, having been compounded by years of political failure" to tackle poverty. Continue reading...
Wall Street notches fresh records as S&P 500 and Dow Jones close at all-time high
Record highs come amid hopes a cooldown in inflation will allow Federal Reserve to cut interest rates several times this yearWall Street scaled fresh records on Monday, as the S&P 500 and the Dow Jones industrial average each closed at an all-time high.The S&P gained 0.2% to 4,850.43. The Dow cleared 38,000 for the first time, rising 0.4% to 38,001.81.Associated Press contributed reporting Continue reading...
‘Good chance’ UK may have fallen into technical recession; S&P 500 hits fresh all-time high – as it happened
Rolling coverage of the latest economic and financial news, as US stocks hit record high in early trading
More than 47,000 UK businesses on ‘brink of collapse’, warn insolvency experts
25% jump in firms facing critical' financial distress, with property and construction sectors featuring heavily, says Begbies Traynor
Top hedge funds make record $67bn in profits for 2023
Profits boom at top 20 funds including TCI, Citadel, Viking and Pershing Square thanks to rebound in stock markets
UK should invest in green economy instead of tax giveaways, Lstudy shows
Economists say funding energy infrastructure, transport, tech and the environment will aid prosperityThe UK should invest 26bn a year in a low-carbon economy to revive prosperity instead of planning tax giveaways that will only lead to further stagnation, leading economists have advised.Investing in energy infrastructure, transport, innovation in new technologies such as AI, and the natural environment would boost the UK's economy rapidly, the research found. Continue reading...
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