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Updated 2024-03-29 00:45
UK insolvencies rising due to high interest rates, says Begbies Traynor
Insolvency specialist recruits more staff as small businesses are hit by tough economic climateHigher interest rates are pushing an increasing number of companies into insolvency, according to one of the UK's biggest insolvency practitioners.Begbies Traynor said it expected to see more businesses tip into insolvency in tandem with the indicators of corporate financial stress in the UK", alongside its financial results published on Monday. Continue reading...
UK Christmas shoppers will pay more for less this year, say economists
Cost of festive season is up almost a quarter in three years, according to the Centre for Economics and Business ResearchConsumers will pay more for less this Christmas, economists have warned, getting less of a bang for their buck than the faint phutting of a puny, overpriced cracker being pulled.Although Britons will spend more than in the belt-tightening 2022 festive season, the resultant fare won't yet match the pre-pandemic Christmases past. Continue reading...
The Guardian view on Labour and the climate crisis: the £28bn question deserves an answer | Editorial
Sir Keir Starmer has popular plans to green the economy but electoral support is the crucial precondition to make them a realityPoliticians know they can't win an argument without making it. Yet unfortunately that is what Sir Keir Starmer seems to believe. In 2021, the party earmarked 28bn a year for a green industrial strategy to rid the economy of its carbon addiction and create a wave of clean jobs". This summer, however, the spending was postponed to the second half of the next parliament. Then it was reported that it would take a full term to ultimately redeem the pledge. Last week, because of self-imposed fiscal rules, Sir Keir suggested it might not happen. This was unsettling, especially as Labour is miles ahead in the polls. Yet more disappointment is in store. On Tuesday, according to reports, the Labour leader will extol the virtues of small technocratic policies rather than big transformative ones.Sir Keir is mistaken if he thinks he can avoid a fight by not turning up. British governments are unusually free to overhaul the country's economy, but electoral support is the crucial precondition for such changes. Green policies won't happen by themselves. This week, Cop28 will reach a climax, spotlighting the climate emergency. Inaction is not an option: relying on volatile gas prices would cost Britain double that of achieving 2050 net zero targets. Sir Keir knows that Labour spending will be caricatured as a tax bombshell" by the Tories. Ministers hope to overwhelm facts with emotional force. But Labour should take heart that Rishi Sunak's U-turn on climate targets in September, coupled with a conspiracy-laden assault on the opposition, fell flat with voters. Continue reading...
All about the consumer: next year will see the end of the spending party
Interest rate hikes will probably end by next year, but small business owners should be prepared for a consumer slowdownIf this year has been all about interest rates, next year is all about the consumer.Rising interest rates were a shock for small businesses in 2023, climbing from 3.25% in early 2022 to 8.5% - a 20-year high. As a result, many of my small business clients - who usually pay a few points above prime if they can get the financing at all - found themselves unable to afford the capital they needed to grow while many others faced a credit tightening. Continue reading...
Bank of England, Fed and ECB poised to leave interest rates on hold
Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next yearThe western world's largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.In a crunch week for the global economy, the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades. Continue reading...
Labour is on course for victory – but what kind of economy will it inherit? | Larry Elliott
Inflation is coming down, but Keir Starmer will need to improve public services when there is a lack of ready cashOpinion was divided in the Labour party after its crushing defeat in the 2019 general election. Optimists thought it would take two terms for the party to have a chance of again forming a government. Pessimists thought it was doomed to permanent opposition.Yet four years on, the polls suggest Labour is on course for a thumping victory. With the Conservatives gripped by an existential crisis, Rishi Sunak could be the last Tory prime minister for a long time to come. Continue reading...
Thatcher? Brexit? This isn’t the way to Labour hearts | William Keegan
Tory policy has caused huge damage over the decades. In praising it, Starmer has ventured too far behind enemy linesAs a longtime critic of many of Mrs Thatcher's economic and social policies, I was somewhat taken aback by the enthusiasm with which the Labour leader, Sir Keir Starmer, recently bracketed her with Clement Attlee and Tony Blair.I don't think I am alone. In what was a none too subtle, indeed blatant, attempt to attract voters away from the fissiparous remains of the Conservative party, Starmer has taken quite a chance. It can be hazardous to venture behind enemy lines: he risks alienating traditional Labour voters, indeed whole communities, for whom the memory of the social scars of the 1980s is still very much present. Continue reading...
Australia’s economy 2023 report: how it started v how it’s going
Stronger than expected population growth made inflation hardier than most experts predicted and property prices defied successive rate rises
Costly credit and a mortgage timebomb: five ways rising interest rates have hit the UK
Two years on from the first in the Bank's run of rate hikes, how have they changed the shape of Britons' finances?Two years ago, Britain's economy was entering an uncertain winter. The Omicron variant of Covid-19 was hitting businesses hard. Furlough had ended. Inflation was at a 10-year high of 5.1%.Against this backdrop - two years ago this week - the Bank of England took its first tentative step to raise interest rates from 0.1% to 0.25%. A month earlier, the Bank had ducked a decision to raise rates given concerns over the end of the government's furlough scheme, wrong-footing financial markets. Few predicted how far Threadneedle Street would go next. Continue reading...
By every measure, Brexit is harming Britain | Letters
Readers respond to an article by Larry Elliott that said the UK's departure from the EU hasn't been as bad as predictedLarry Elliott makes two main arguments in his article (I've got news for those who say Brexit is a disaster: it isn't. That's why rejoining is just a pipe dream, 5 December). He's wrong on both.His first point is that the EU is faltering and the UK is recovering more quickly from global headwinds. However, he is using the wrong comparison. We should not compare the UK with the EU, but with what the UK would have been like without Brexit. The opportunity cost, not the relative comparison, is the relevant factor. And on this correct measure, Brexit is deeply damaging to the UK economy. Continue reading...
UK regulator examining Microsoft’s OpenAI ties; two-year mortgage rates lowest since June – as it happened
Rolling coverage of the latest economic and financial news
US economy adds 199,000 jobs as unemployment rate falls slightly
Jobless rate down to 3.7% as world's largest economy grapples with interest rates and American policymakers plot next movesThe US workforce added 199,000 jobs last month, a robust reading as the world's largest economy continues to grapple with higher interest rates.Employment growth has been fading this year after the Federal Reserve launched an aggressive campaign to pull back inflation from its highest levels in a generation. Official data has bolstered hopes that the central bank will manage to guide the US economy to a so-called soft landing", where price growth normalises and recession is avoided. Continue reading...
Higher interest rates are here to stay, so we need a rethink | Kenneth Rogoff
Even if inflation falls, soaring debt levels, deglobalisation and populist pressures will have an impactEven with the recent part retreat in long-term real and nominal interest rates, they remain well above the ultra-low levels to which policymakers had grown accustomed, and they are likely to stay at such levels even as inflation retreats. It is now past time to revisit the widely prevailing free lunch" view of government debt.The idea that interest rates would be low for ever seemed to support the view that any concern about debt was an endorsement of austerity". Many came to believe that governments should run large deficits during recessions and only slightly smaller deficits in normal times. No one seemed concerned with the possible risks, in particular to inflation and interest rates. The left championed the notion that government debt could be used to expand social programmes, going beyond what could be generated by reducing military spending, while those on the right seemed to believe that taxes exist only to be cut. Continue reading...
Most Australian mortgage holders on track with loan repayments despite high interest rates, RBA official reveals
Number of borrowers in severe financial stress' has risen but most showing resilience, Reserve Bank's Andrea Brischetto says
UK employers limit hiring permanent staff amid economic stresses
Vacancies declining as growth falters, recruiters' body tells Bank of EnglandBritain's largest recruiters have warned the Bank of England that demand for permanent hiring among UK businesses has plunged at the second fastest rate since the pandemic, amid worsening headwinds for the UK economy.Ahead of the central bank's decision on interest rates on 14 December, the Recruitment and Employment Confederation (REC) trade body said lingering economic uncertainty and hesitancy to commit to new hires had weighed on activity in November. Continue reading...
Jeremy Hunt’s post-Brexit City shake-up is ‘damp squib’, say MPs
Treasury select committee says Edinburgh reforms launched a year ago have had little impact on UK economyJeremy Hunt's post-Brexit City shake-up has been dismissed as a damp squib" that has had little impact on the UK economy a year after its launch.The chancellor announced the bold collection" of policy changes known as the Edinburgh reforms in December 2022 with the claim they would create jobs, support businesses and power growth across all four nations of the UK". Continue reading...
Greedflation: corporate profiteering ‘significantly’ boosted global prices, study shows
Multinationals in particular hiked prices far above rise in costs to deliver an outsize impact on cost of living crisis, report concludesProfiteering has played a significant role in boosting inflation during 2022, according to a report that calls for a global corporation tax to curb excess profits.Analysis of the financial accounts of many of the UK's biggest businesses found that profits far outpaced increases in costs, helping to push up inflation last year to levels not seen since the early 1980s.ExxonMobil: profits of 15bn increased to 53bnShell: 16bn up to 44bnGlencore: 1.9 bn up to 14.8bnArcher-Daniels-Midland: 1.4bn up to 3.16bnKraft Heinz: 265m up to 1.8bn Continue reading...
The Guardian view on Tory ideology: Thatcherism isn’t working – it never did | Editorial
There was no miracle, only a myth manufactured by the Iron Lady herself. It's time Westminster woke up to thatA spectre is haunting British politics. Its outline is instantly recognisable to every Briton of a certain age:hair coiffed into a halo, shoulders firmed up withpads and, jutting out from the left wrist, the inevitable handbag.More than three decades after she was driven out of No 10, and a decade after her death, Margaret Thatcher still casts a long shadow over the country she once ruled, and her party. Rishi Sunak sat in her old Rover (and tweeted about it, naturally) and LizTruss copied her wardrobe. She influenced the Labour party under Tony Blair, though this admiration was first tempered by Labour under Ed Miliband and even more under Jeremy Corbyn. Sir Keir Starmer's praise for Mrs Thatcher is perhaps more about internal Labour politics than about the Tories' leaderene". Continue reading...
Brexit car tariffs to be suspended for three years as EU protects car exports – as it happened
Live, rolling coverage of business, economics and financial markets as Bank of England's Andrew Bailey calls for UK to embrace AI'The Bank has said that the full effect of interest rate increases is yet to come through to the economy, suggesting there may be more pain ahead.It said:The full effect of higher interest rates has yet to come through, posing ongoing challenges to households, businesses and governments, which could be amplified by vulnerabilities in the system of market-based financeThe full impact of higher interest rates will take time to come through. Given the impact of higher and more volatile rates, and uncertainties associated with inflation and growth, some risky asset valuations continue to appear stretched.Conditions remain challenging, given increased geopolitical tensions and uncertainties over growth, inflation and interest rates.The UK banking system is strong enough to support households and businesses, even if the economy does worse than expected. Continue reading...
Why the EU now plans to delay post-Brexit tariffs on electric vehicles
All you need to know about the European Commission's new proposal to delay its 10% charge on EVs
Australia’s economic growth slows, reducing chance of another interest rate rise next year
Economy grows more slowly than expected, with consumer spending flat under the pressure of high interest rates
EU set to suspend Brexit tariffs on EVs for three years in major boost for car industry
Commission moves to delay 10% sales charge after intense lobbying by EU and UK carmakersThe European Commission looks set to propose a three-year delay to a 10% tariff on sales of electric vehicles between the EU and the UK, in a major boost for car industries across Europe.Duties were due to kick in on 1 January 2024 but all the major carmakers in the UK and Europe including BMW, Volkswagen and Stellantis have been lobbying for a temporary reprieve. Continue reading...
EU expected to issue veiled warning to China over supply of cut-cost goods
European Commission chief Ursula von der Leyen to meet Chinese president Xi Jinping at summit on ThursdayThe EU is to tell China that its 400bn (343bn) trade deficit is not sustainable long term amid fears that it will flood the bloc with subsidised electric cars, solar panels and medical devices, threatening European manufacturing and jobs.Ursula von der Leyen, the European Commission chief, and Charles Michel, the European Council president, will meet Xi Jinping at a summit on Thursday, the second of its kind this year. Continue reading...
China’s credit outlook cut to negative; Rupert Soames named CBI president; trading outages in London – as it happened
Moody's cuts its outlook on China's credit rating, while trading in smaller stocks in London is hit by systems problems
Fierce supermarket competition in UK keeps lid on Christmas dinner costs
Festive feast for four rises in price far below annual food inflation rate with sparkling wine and pudding cheaper than in 2022The cost of a traditional Christmas dinner for four has risen 1.3% this year to 31.71, as fierce competition between supermarkets offsets high inflation.The increased cost of a festive family feast is far below the 9.1% rate of general grocery inflation tracked in November, which marks a further easing from 9.7% in October, according to research by Kantar. Continue reading...
Moody’s cuts China credit outlook to negative as economy slows
Rating agency says Beijing may need to bail out local governments as property sector collapsesChina's ability to repay its government borrowing has been downgraded by the credit rating agency Moody's, which said the ripple effects from a crisis in the property sector would undermine efforts to revive its flagging economy.Moody's warned that Beijing would need to bail out local and regional governments and state-owned enterprises that were struggling with rising debts, hampering efforts to boost investment and growth. Continue reading...
I've got news for those who say Brexit is a disaster: it isn't. That’s why rejoining is just a pipe dream | Larry Elliott
Many still hanker for how things were: but looking across the Channel, it's completely illogical to do thatBrexit is a dead issue at Westminster. There are any number of issues where it is hard to separate Labour and the Conservatives, and the reluctance to reopen the 2016 referendum debate is one of them. As with tax and spending, Keir Starmer is broadly offering continuity Rishi Sunak.That doesn't mean the debate about leaving is over. Plenty of people still nurture the hope that the decision will be reversed and are working to that end. But any successful campaign would need to do two things: convince voters that the UK economy had become a basket case since the Brexit vote and that life for those still in the club was so much better. Continue reading...
The Guardian view on a dismal inheritance: the UK does not need another bout of austerity | Editorial
Fixing a broken economy with service-led growth and increases in public investment as well as welfare spending should be seriously consideredAdam Smith, the father of economics, condemned as unproductive the labours of churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers". How wrong he turned out to be, says the Resolution Foundation thinktank. It points out that the creative industries accounted for 6% of the UK economy last year, and have grown faster than the UKeconomyoverall since 2011.The report, Ending Stagnation, says the last 15 years of low growth and high inequality have seen a living standards gap worth 8,300 open up between typical households in Britain and those in France, Germany and the Netherlands. It suggests fixing this by growing the UK economy through its service sector - and the work of Smith's grave" lawyers and frivolous" musicians - to pay for higher investment and higher benefits. Continue reading...
The broken state of UK economy is clear; Hunt and Starmer’s solutions are less so
Resolution Foundation report underlines lack of progress by Tories but Labour proposals seem woolly
James Cleverly tells MPs crackdown will cut annual immigration numbers by about 300,000 – as it happened
Home secretary to announce big hike in salary requirement for migrants to the UK as Rishi Sunak tries to cut net migration figuresHunt says the government wants to speed up the time it takes to get a connection to the national grid by 90%.Zanny Minton Beddoes, the editor of the Economist, is interviewing Hunt. She says he has mentioned the 110 policies, but she wants to know what the growth strategy is. Continue reading...
Public spending is not the only lever Labour can pull, says Starmer
Labour leader refuses to rule out keeping planned cuts to government departments if he wins power
Gold hits record high and bitcoin breaks $42,000 – as it happened
Gold at all-time high, and bitcoin at 20-month peak, as traders bet on US interest rate cuts early next year, while ONS shows that mortgage holders face higher inflation
Britain has been in a 15-year economic slump. This is our route out of it | Torsten Bell
Ours is the most unequal major economy in Europe, with poorer workers losing out most. It's time to start playing to our strengthsBritain has huge strengths, but it is now impossible to miss that we're in a phase of relative decline. A year or two of poor productivity growth and flatlining wages is survivable, but 15 long years of stagnation is not: workers today take home no more than they did heading into the financial crisis. The cost of wages not growing as they used to? 10,700 a year for the average worker.Slow growth combines with longer-lasting high inequality: the UK is Europe's most unequal large economy. That combination has proved toxic for people in Britain on middle and low incomes. We think we're similar to the likes of France or Germany, but our poorer families are now a staggering 27% worse off than their French and German counterparts.Torsten Bell is chief executive of the Resolution Foundation Continue reading...
Jeremy Hunt blames Brexit for sparking half-decade of instability
Chancellor says vote led to incredibly challenging time' as he defends tax cuts paid for by public sector austerity
UK has lacked coherent economic strategy for years, thinktank finds
Trade has been hit by Brexit, while the number in poverty has risen sharply in a country ill-prepared for the future
Pennsylvania may lean Democrat, but that doesn’t mean Biden will win the state
Bidenomics remains abstract against the cold hard reality of higher prices and higher taxesMy home city of Philadelphia has a population of about 1.6 million people, of which about 1 million are registered voters. According to the most recent numbers from the Commonwealth of Pennsylvania, approximately 75% of voters are registered Democrats and 11% are Republicans. Our mayor, city council and district attorney and most other important political leaders are Democrats. Joe Biden would win by a landslide if the 2024 presidential election were held only in Philadelphia. Of course, it's not.Pennsylvania is a big state with a critical 20 electoral votes. In many ways it is a good proxy for how the US as a whole will vote and - as someone who works with businesses across the state - fast-approaching 2024 will be all about the economy. Continue reading...
‘I’m not buying new stuff any more’: the young people getting into ‘degrowth’
Amid the cost of living crisis and threats to the climate, many are pledging to consume less and spend sustainably
Are young people poised to slam the brake on endless economic growth?
The climate and cost of living crises make belief in expanding GDPs look as stale as last year's mince pies. But when central governments rely on consumerism to shore up spending, it will be hard for degrowth' to gain any tractionWhen Kat Butler made her first post-lockdown trip to the high street in 2021, she found herself staring, disorientated, at the aisles of clothes in the Perth branch of Mountain Warehouse. There was just rails and rails of stuff," she says.Before the pandemic, Butler, 36, a freelance graphic designer, had enjoyed browsing clothes shops, touching the fabrics and inspecting garments' construction. But when she returned after the lockdown months, she was just overwhelmed by the amount of stuff". Continue reading...
If taxing the rich is so fraught, maybe we need a rethink | Phillip Inman
The cost of government is rising, yet raising taxes is bad politics. From productivity to degrowth', the left ought to get behind the more radical approachesTaxing the better-off is not going to be easy. For one thing, no one can agree on how to go about it. Thinktanks have put forward various proposals, usually targeting individual wealth.Voices across the political spectrum agree with the need for such a move. Free-market economists are just as worried about the excessive accumulation of personal capital as those on the left. Continue reading...
UK economy shows signs of steadying amid pause in interest rate rises
Modest fall in mortgage costs and rising manufacturer confidence fuel hopes that UK is turning the corner'
UK house prices rise for third month; factory downturn eases – as it happened
Nationwide reports house prices only fell 2% in year to November, and rose during the month, as mortgage rates fallNationwide has also provided this chart, showing how UK interest rate expectations in the financial markets have eased back, after surging earlier this year:Robert Gardner, Nationwide's chief economist, explains:These shifts are important as they have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing, as shown below.If sustained, this will help to ease the affordability pressures that have been stifling housing market activity in recent quarters, where the number of mortgage approvals for house purchases has been running at c.30% below pre-pandemic levels. Continue reading...
Lord Darling of Roulanish obituary
Labour chancellor of the exchequer who in 2008 found himself in the eye of an unparalleled economic stormAlistair Darling, the former Labour chancellor of the exchequer, who has died of cancer aged 70, was appointed to run the Treasury in the early summer of 2007, just weeks before a devastating credit crisis at Northern Rock led to the first run on a British bank in 150 years, which would in turn serve as the harbinger of the ensuing global financial recession. It was Darling who announced that the government and the Bank of England would guarantee the deposits at Northern Rock and who later ordered the 50bn rescue of the Royal Bank of Scotland within hours of its collapse.He would reflect afterwards that Britain had been perilously close to a breakdown in law and order, which could have been precipitated by the failure of what was then, if briefly, the largest bank in the world. He thus left the Treasury in 2010, after three tumultuous years, with his previously established reputation for maintaining stability in times of trouble considerably enhanced. His earlier close friendship with the then prime minister, Gordon Brown, was ruptured, however, by the differences over how they handled the sequence of critical events of the period. Continue reading...
Iceland boss hits out at parent ‘exploitation’ in baby milk market
Richard Walker calls for price cap on infant formula as competition watchdog finds evidence of greedflation
Alistair Darling was a rare exception: a politician who quietly got things done
As chancellor during the financial crisis he showed great wisdom and courage, and he played a huge part in keeping the UK intact in the Scottish referendum
How underrated chancellor Alistair Darling helped weather financial crisis
Labour politician, who has died aged 70, faced toughest challenge of his career when economy crashed in 2008
Eurozone inflation falls to within striking distance of 2% target
November's figures fuel speculation about timing of ECB interest rate cut as concerns grow about national finances
Australia’s inflation rate eased to 4.9% in October, reducing likelihood of another rate rise
Consumer price index rose last month at an annual rate of 4.9%, which is lower than economists had forecast
UK competition watchdog to investigate baby formula market
CMA announces move after finding popular grocery brands put up prices on number of products faster than costs rose
Central banks ‘risk tipping UK and other developed countries into recession’
Stance on inflation poses threat to soft landing' forecast for global economy, says OECD
Jeremy Hunt’s debt reduction plan ‘a very big fiscal risk’, says OBR
Treasury's independent forecaster says uncertain spending plans and higher than expected inflation could scupper cutsGovernment plans to reduce the UK's debt mountain by restricting Whitehall spending are among the biggest risks to the outlook for the public finances, according to the Treasury's independent forecaster.The Office for Budget Responsibility (OBR), which predicts the impact of economic trends and government spending decisions on the public finances, said the uncertainty surrounding the government's spending after next year and higher than expected inflation meant there was a risk that planned budget cuts to debt in five years' time would be dashed. Continue reading...
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