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...
by Richard Partington Economics correspondent on (#6J22H)
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...
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...
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...
by Richard Partington Economics correspondent on (#6J1B3)
Comparing actual economic growth across UK cities with pre-2010 trends shows Aberdeen 45,000 poorer, with Burnley next at 28,000People in Aberdeen are a total of 45,000 worse off since 2010 after suffering the worst growth performance in the UK over the last decade, according to a report exposing the dangers of dependency on the fossil fuel industry amid the climate crisis.Warning that every part of the UK had been levelled down" after years of weak economic growth, the Centre for Cities said the Scottish oil and gas capital had lost out the most of the 63 UK towns and cities it had analysed. Continue reading...
Exclusive: NFU warns blanket import checks from April could fuel long delays and damage future cropsThe UK's fruit and flower growers face an existential threat" from new post-Brexit border checks that could damage business and affect next year's crops, the country's biggest farming body has said.The National Farmers' Union (NFU) warned that changes to import rules in April, which will impose checks at the border for nearly all young plants coming into the country, could cause long delays and result in plants being damaged or destroyed. Continue reading...
EY Item Club report hands PM new year boost with prediction that inflation drop will allow interest rates to fall to 4% by year endThe UK economy will benefit from falling inflation and lower interest rates in the second half of the year, boosting growth and allowing the government to offer pre-election giveaways, according to a study by a leading forecaster.Handing Rishi Sunak a new year boost, the advisory business EY Item Club, which is sponsored by the accountancy firm EY, said its winter forecast showed that a long period of economic stagnation should begin to fade this year as falling inflation, potential interest rate cuts and tax reductions create momentum for growth in 2024 and 2025". Continue reading...
Figure represents cost to NHS, productivity lost by society, and losses and expenses for patientsThe cost of breast cancer to the UK economy could reach 3.6bn a year by 2034, according to a new report.This year, the total cost of breast cancer to the UK economy is estimated to be 2.6bn-2.8bn, or about 0.1% of UK gross output, economic modelling in the study shows. That could rise by almost 40% if no action is taken to improve screening rates and cut advanced cancer cases, the study from the thinktank Demos and the charity Breast Cancer Now suggests. Continue reading...
Multiple indicators - from GDP growth to the unemployment rate (and even inflation) - point to a robust US economic engineThe Republican primaries are under way and - not surprisingly - the candidates have been ganging up on Bidenomics. Spoiler alert: they don't like it. Fact check: they are wrong.To a man - and one woman - the Republican candidates all say that the US economy is bad and that Americans are struggling financially. They're warning about sky-high deficits, over-the-top government spending and a potentially catastrophic level of national debt. They point out that interest rates are at a 20-year high and the costs of core things like food, gas and housing are significantly more than they were just a few years ago. They point to a downturn in manufacturing and falling small business confidence. Continue reading...
Industrial policy such as a green growth plan is no longer a dirty word as nations realise shorter supply chains and a strategic state role are necessaryNot bad. But not great either. That summed up the mood as the World Economic Forum ended in Davos last Friday with a panel on the state of the global economy. Not bad because most countries outperformed expectations of a year ago. Not bad because sharply rising interest rates didn't plunge the US, the eurozone and the UK into recession. Not bad because the war between Israel and Hamas has failed to send oil prices shooting above $100 a barrel.Not great because central banks face a balancing act between cutting interest rates too quickly and reigniting inflation, and keeping them too high and plunging their economies into recession. Not great, because the early weeks of 2024 have led to a wider Middle East conflict, with implications for one of the world's main trade routes. And not great because - as Davos showed - the global economy is deeply fractured. Continue reading...
Prof Ingrid Robeyns has spent a decade studying wealth and ethics and says that limits are essential if we want to eradicate poverty and protect social cohesion and the planet Read a short extract from Limitarianism by Ingrid RobeynsHere's a couple of good questions for an election year: while we may talk about minimum wages, why don't we ever discuss maximum wages? And, while our politicians may argue about how little a family can survive on, why do they never address the other end of the inequality scale: just how much accumulated wealth might be too much?This week in January is always a pertinent one for such questions. As the world's billionaires have private-jetted out to Davos to slap themselves on the back once again for their outrageous fortune, Oxfam has produced its annual report about the growing gap between that happy few and the other 8 billion from whom they profit and with whom they share the planet's resources. This year's report, Inequality Inc, again articulates a trend that we have all witnessed for the past four decades and more. While most people, locally, nationally, globally, try to survive on the same or less, the rich and the very rich become phenomenally more wealthy year by year. Since 2020, the report reveals, 60% of humanity has grown poorer, [while] billionaires are now $3.3tn or 34% richer than they were at the beginning of this decade of crisis." The wealth of the world's five richest men has more than doubled in that period, adding an unprecedented $464bn to their fortunes. Continue reading...
Now that the UK has been taken out of trade zone, we are left only with the damage she wreaked on the British polityBoth chancellor Jeremy Hunt and shadow chancellor Rachel Reeves went to the annual Davos World Economic Forum last week proclaiming that Britain was open to business".These mundane statements of the obvious reminded me of the character in one of Michael Frayn's novels who had an open mind - open at the front and open at the back". Continue reading...
Study highlights products whose pack size or amount of expensive ingredients have gone down but not priceSausages with less pork, chicken enchiladas with reduced meat content and shrunken pats of Lurpak butter are among the downsized and downgraded groceries being offered to consumers as retailers and manufacturers cut costs, a consumer group has claimed.Which? highlighted a range of products it said were subject to shrinkflation" - when pack sizes are made smaller but the cost is not cut, or skimpflation" - when expensive ingredients are reduced but the price consumers pay remains the same. Continue reading...
by Dominic Rushe and Callum Jones in New York on (#6HZTB)
Index climbs to all-time high of 4,838, clearing record set two years ago, as US consumer confidence rises while inflation concerns easeThe S&P 500 scaled a new all-time high on Friday amid signs that the economic despondency that has gripped US consumers may be easing.The index climbed 1.2% to 4,838 on Friday afternoon, clearing a record last set two years ago. It has rallied more than 17% since late October. Continue reading...
by Larry Elliott and John Collingridge in Davos on (#6HZQS)
Neither man was present at World Economic Forum where Labour impressed global business chiefsVladimir Putin and Donald Trump. Neither were on the guest list for the 54th annual meeting of the World Economic Forum, yet the man in the Kremlin and the other one plotting a return to the White House still managed to dominate Davos.The regular January talkfest high in the Swiss Alps attracted an impressive list of world leaders of all political persuasions. The Chinese premier, Li Qiang, set out China's five-point plan for rebuilding trust. Javier Milei used his first overseas trip since becoming Argentina's president to set out his ultra free-market agenda. The French president, Emmanuel Macron, boasted about his success in revitalising France's economy. Continue reading...
Thinktank report says resounding evidence' shows companies continue to keep prices high even as their inflationary costs dropA new report claims resounding evidence" shows that high corporate profits are a main driver of ongoing inflation, and companies continue to keep prices high even as their inflationary costs drop.The report, compiled by the progressive Groundwork Collaborative thinktank, found corporate profits accounted for about 53% of inflation during last year's second and third quarters. Profits drove just 11% of price growth in the 40 years prior to the pandemic, according to the report. Continue reading...
Shadow chancellor will say party has put private sector investment at heart of growth strategy, at JP Morgan breakfast meetingLabour intends to restore Britain's reputation as a place to do business after 14 years of Conservative economic failure, the shadow chancellor will tell members of the global elite in Davos on Wednesday.Stepping up Labour's pre-election boardroom charm offensive, Reeves will tell a breakfast meeting hosted by the US investment bank JP Morgan that boosting private sector investment is key to the party's growth strategy. Continue reading...
by Larry Elliott and Graeme Wearden in Davos on (#6HW4Y)
Ukraine, Middle East and Taiwan overshadow annual meeting at Davos, with artificial intelligence also high on agendaGrowing concern that heightened geopolitical tension could damage an already shaky global economy has dominated the start of the annual gathering of the world's business and political elite in Davos, Switzerland.Three potential flash points - Ukraine, the Middle East and Taiwan - threatened to overshadow the meeting of the World Economic Forum (WEF) aimed at rebuilding trust after the series of setbacks suffered in the past four years, including war, the Covid-19 pandemic and the cost of living crisis. Continue reading...
Panic is confined to media headlines for now but Britain is as addicted as ever to Asian importsEscalating tensions in the Middle East, rising oil prices and lengthy delays to international shipping have been hogging the headlines in the past few days. Before this, the prospects for the world economy had been looking a little brighter. But with military intervention in the Red Sea and disruption to global trade, all bets are off.As world leaders gather this week for the annual Davos meeting in Switzerland, the concern will be that last year's downward march for inflation will be halted by rising geopolitical tensions. Since the last mountaintop bash, conflict has spread from eastern Europe to the Middle East, while the risk of a new cold war is mounting - not least highlighted by China's frosty response to the election of Taiwan's new pro-sovereignty president last week. Continue reading...
The shadow chancellor had plans to invest in infrastructure and more, but the weight of expert economic disapproval is wearing her down as the election nearsOne by one, they stamp all over your dreams. In this election year, the dashed hopes will belong to Rachel Reeves. In 2010 the victim was Alistair Darling.Reeves wants to increase spending on the UK's crumbling infrastructure should Labour win at the polls. Her commitments have become less ambitious as pressure mounts from mainstream economists and those in high finance worried about current debt levels escalating.Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk Continue reading...
The World Economic Forum has already wrestled with pandemic and recession, but the troubles keep comingThe limos have been booked. Hotels have loaded up with champagne. Shops have been converted into pop-up offices for the tech giants. The annual Davos talkfest is about to begin.The collective mood of the 2,800 participants is anything but cheery as they make their way to the small Alpine town immortalised by Thomas Mann in his novel The Magic Mountain for the annual meeting of the World Economic Forum (WEF). Continue reading...
Consumer price index exceeds economists' expectations as Fed weighs when to start cutting borrowing costsInflation ticked higher in the United States last month as the Federal Reserve weighs the latest stage of its battle against price growth.The headline consumer price index increased at an annual pace of 3.4% in December, according to the Bureau of Labor Statistics, up from 3.1% in the previous month, and exceeding economists' expectations of about 3.2%. Continue reading...
Forecasters at three leading institutions suggest inflation rate will halve to 2% by AprilThe Bank of England may be forced to bring forward the date of its first interest rate cut after three leading forecasters issued a surprise update suggesting the inflation rate will halve to 2% by April.The Oxford Economics consultancy and analysts at Investec and Deutsche Bank have reassessed their outlook for inflation in 2024 and concluded that the consumer prices index (CPI), which dropped to 3.9% in November last year, will fall below 2% within four months. Continue reading...
James Meadway, once a Labour adviser and now a podcast host, says the separation between climate and economy has to endJames Meadway is an economist who is not at all impressed with economics. Formerly an adviser to John McDonnell when he was Labour shadow chancellor, Meadway has plenty to say about what mainstream economics gets wrong. But one of his central gripes is the way it treats the environment. We cannot simply pretend that ... the entire ecological crisis is a separate and distinct thing from what's happening in the economy," says Meadway, who now works on climate finance. And yet that is precisely what happens.This critique informs the podcast, Macrodose, which Meadway presents and which has recently turned one year old. Its tagline is Your weekly fix of climate economics". Every Wednesday, in 15 minutes or so, Meadway analyses the key economic stories of the week. Part of the aim is to make economics more accessible because, he says, it is often thought of as something so difficult that you have to be really clever to do it". Continue reading...